You may have heard of debt consolidation before. The process involves rolling all of the debts you have into a single loan from just one lending entity. However, you can also do the same thing by working with a nonprofit.
We will talk about how non profit debt consolidation works in the following article. It’s worth knowing about this possibility if you have multiple debts and you’re thinking about consolidating them.
Why Consolidate Debt?
Before we jump into how debt consolidation works when you’re dealing with a nonprofit business entity, we should first ensure that you understand why you’d want to undergo this process. Usually, consumers who owe money to multiple lending entities, such as credit card companies, want to consolidate for simplicity’s sake.
It’s often better to owe a set amount to one entity each month than to several. By consolidating, you can sometimes save money on interest as well if you can get a more favorable rate than what you are currently paying.
Now, let’s talk about nonprofit debt consolidation loans.
Nonprofit Debt Consolidation Companies
Nonprofit debt consolidation companies are not trying to make money off of you in the way for-profit debt consolidation companies are. They are socially responsible business entities that can help you if you’ve gotten yourself into some trouble with debt.
With a for-profit entity, like a credit card company, you would be taking out a single loan that takes the place of your current outstanding one. The credit card company, in this instance, would make money off of you in the form of interest you’re paying on the loan.
Nonprofit companies don’t do that. Instead, they’ll work with credit card companies or any other entities to which you owe money, and they won’t charge you a dime for it. The one catch is that you’ll have to give up using your credit cards until your debt is paid off.
What Kinds of Debt Can You Pay Off This Way?
If you’re looking to a nonprofit debt consolidation company for help, you might wonder what kinds of debt you can get rid of this way. Credit card debt is perhaps the most common.
However, you can also pay off medical debt from hospital bills, clinics, or private doctor’s offices. You might pay off student loans this way as well.
How Nonprofit Debt Consolidation Companies Function
You might also be curious about how nonprofit debt consolidation companies can afford to stay open if they’re not making any money off of you. The answer is that most of these companies operate with the help of grants. Foundations and wealthy donors are out there who want to help individuals who have gotten themselves into tight spots with debt.
These agencies exist to get you on more stable financial footing. It’s well worth looking into some of them if debt consolidation seems like the most realistic option for your current financial situation.
Is a Nonprofit Debt Consolidation Company for You?
Now that you know the difference between for-profit and nonprofit debt consolidation companies, you might choose to look at what each one offers you if you have several outstanding debts hanging over your head. Nonprofits are viable options if you fit the criteria that each one will explain to you if you speak to one of their representatives.
You should have no issue accepting help from a nonprofit if you feel overwhelmed by debt. Maybe you find yourself underwater with medical debt, school loans, or credit card purchases you used for necessities.
If so, do some research into nonprofit debt consolidation companies that might be willing to assist you. Having one on your side can help you immeasurably as you work toward becoming debt-free again.