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Understanding Creditor Statements
APR:Annual Percentage Rate
Minimum Payment Due
Finance Charge or Interest
Credit Card Limits
Types of Debt
Good vs. Bad Debt
National Consumer Debt
Credit Card Debt
Credit Card and Divorce
How Non-Profits are Funded
All non-profit debt consolidation companies must have a Federal 501-C3 non-profit status form on file. However the consumer should never use this filing as the only qualification to determine if the company is a true non-profit. Many so called non-profit debt consolidation company managers advertise this status to attract consumers when the are not actually non-profit.
Creditors fund consolidation firms with voluntary contributions known as Fair Share. A few years ago creditors paid firms as much as 15% of the payments they handled from consumers, but now that percentage is down to 6% or less. While consumers get credit for 100% of their payment, this funding drop makes it harder for non-profit debt consolidation firms to continue offering their services. To stay in business to help you, most non-profit firms are now asking consumers to contribute a modest additional amount, $5-$20, in the monthly payment to help cover the administrative costs of the debt management program. These payments may be voluntary and contributing helps keep the program active and helps others who are in debt retain services.
A legitimate non-profit debt consolidation company will not retain a first payment. A first payment is a one-time fee equal to the first months payment on all debts consolidated. A non-profit will also not charge a monthly fee on each individual debt.
Finding a non-profit debt consolidation company who is really a non-profit agency can be difficult. A good consumer credit counseling service will tell you if they are also a non-profit debt consolidation company. A non-profit debt consolidation company usually will give you their consumer credit counseling service for a small fee or maybe no fee at all. That's how you know a consumer credit counseling service is truly a non-profit debt consolidation company.
Additionally not all debts should be listed because many are non-negotiable. For example, some student loans, payments to I.R.S., selected Credit Union loans, many department store accounts, foreign creditors, and many others cannot be negotiated. Needless to say a dishonest non-profit company wants includes these items because it inflates the retainer or first payment (which a true non-profit debt consolidation company would not be taking in the first place). At a later time the "fake" non-profit debt consolidation company would then inform the client that the creditor has since changed policy and nothing can be done. Of course, this "pseudo" non-profit debt consolidation company will keep the retainer anyway because they can't be held responsible for a "change of the creditor's policy".