Be Careful with Non-profit Debt Relief Companies

The Federal Trade Commission (FTC) has given many non-profit debt relief organizations fines for the ways in which they conduct their business. Many consumers who are in financial trouble turn to these non-profit debt relief organizations looking for an answer yet all they end up with is a disappointing let down. There are various claims used by such non-profit debt reduction agencies to lure you in. They claim to be willing to help you from the goodness of their heart but they are still in it for a profit. 

Consumers fall for the hype by these non-profit debt relief agencies because they claim that they can lower the debt owed by as much as 50% by negotiating with the creditors. They also promote their program as the only alternative to bankruptcy and they portray that in a very negative light. They may also claim that working with them won’t have a negative impact on your credit score.

What Will Non-Profit Debt Relief Companies Ask of You?

Non-profit debt reduction organizations ask you to pay them a specific fee at determined intervals. They claim that this is to cover the cost of negotiating with the creditors. They also tell you not to worry about paying your bills when you are working with them. Now most of us reading this would think that their claims are simply too good to be true. In fact they are in most cases. Don’t be fooled by the non-profit status as they simply balloon their operating expenses so that they appear to merely break even. 

In 2005 the FTC filed a complaint against the National Consumer Council because the latter claimed to be a non-profit debt negotiating company. The National Consumer Council ended up deceiving over 45,000 customers who thought the company was working to get them out from under a mountain of debt. There were associate companies included in this complaint as well including the London Financial Group and Financial Rescue Services. Each of them told consumers they would be able to solve their debt issues if consumers deposited a specific amount of money into an account on a regular basis. 

Are There Really Legitimate Non-Profit Debt Relief Companies? 

There are a handful of legitimate non-profit debt relief companies out there, but you need to be careful. It is a good idea to investigate any non-profit debt reduction company that you are considering working with. You can get information for free from the Better Business Bureau. This is a great way to find out about any complaints others have filed against them. 

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