By Hector Milla
The word "non-profit" is confusing to most consumers. When they see that word they think that a business is a charity and doesn't seek to make money. However, that isn't the case. Every business or organization needs money to operate and a non-profit debt settlement company is no exception.
The Difference in Non-Profit and For-Profit Companies
The only difference in non-profit settlement companies and for-profit companies is the way the company is funded. Non-profit debt settlement companies operate with funds donated by consumers, creditors, and other businesses. Many creditors will allocate a certain percentage of their customer's payments to donate to non-profit debt negotiation companies. These companies are established to help the consumer with his debts.
For-profit debt settlement companies charge consumers for the privilege of having their debts reduced through negotiations conducted for them with their creditors. These companies sometimes charge a fee upfront and a monthly fee that is added to the payments the consumer makes to settle his debts. These companies are established to make a profit.
How to Determine if a Company is Non-Profit
When investigating a debt assistance company look for any mention of an IRS 501 (c) (3) non-profit exemption status that non-profits must file with the IRS.
Scams to Watch
There are non-profit debt settlement organizations that are legitimate and operate correctly under the law. However, there are companies in place that will take money from trusting consumers because these companies seem to be helpful without trying to make a profit. Things to watch for are:
• Find out how much of your monthly payment actually goes to your creditors. Some non-profit companies will claim to offer free services, but when you see the difference in the amount paid to creditors and what you pay you will find that the company is taking the difference as an administrative fee.
• If the non-profit you are dealing with is online be careful about what information you give them. Don't give out credit card numbers or bank account numbers online. You want to avoid unauthorized withdrawals from your accounts.
As you can see for-profit and non-profit debt settlement companies provide the same services. The only difference is how the companies procure funds. They both need funds to operate and those funds are taken from you or donated by other businesses. The best option is to look for a company you feel will do the best job for your situation.
NOTE: By researching and comparing the best debt settlement services in the market, you will determine the one that meets your very specific financial situation. As usual, professional advise coming from a seasoned debt counselor is highly recommended.
Hector Milla runs the Best Debt Settlement Companies website - where you can see his best rated debt settlement firms.
Article Source: http://EzineArticles.com/?expert=Hector_Milla
Non-Profit Debt Settlement Companies - Are They Legitimate?
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