Where to Find Non-Profit Debt Counseling

Are you looking for a non-profit organization that offers debt counseling and general help with financial planning? If so, you need to read this article.

I'm always amazed when I see companies offering debt counseling or "relief" and then charging a lot of money for it. This is a contradiction that makes no sense to me. How can you help somebody fix their debt problems by adding to the problem? That's why I usually recommend non-profit debt counseling services to the readers of this blog. To help you find such help, I've created a list of non-profit organizations that offer assistance in this area.

Our Recommendations for Debt Counseling

Both of the organizations listed below are non-profits, and both offer some form of debt counseling service for consumers in the U.S. Keep in mind, however, that even a non-profit organization may charge for its services (though many of their services are free).

National Foundation for Credit Counseling (NFCC)
As their full name suggests, the NFCC overs a variety of credit counseling services for consumers. They also provide debt advice and assistance. Headquartered in Silver Spring, Maryland, this non-profit organization has been around for many years. They offer counseling on debt management and many other areas. According to their website, the majority of their services are "provided at low or no cost to clients."
http://www.nfcc.org

Consumer Credit Counseling Services (CCCS)
This non-profit agency was created in 1999, and they also provide a wide range of counseling and help related to credit, debt management and similar topics. They counsel their clients in person, over the phone, and via the Internet, depending on the logistical circumstances. They can help you create a debt management plan, among other things.
http://www.creditcounseling.org

Springboard (Credit.org)
This non-profit has been around since 1974. They provide education and counseling designed to help people improve their credit. If you want to feel good about the legitimacy of this organization, I recommend visiting their "About" page and reviewing their long list of accreditation. They are affiliated with, or accredited by, the other non-profit agencies listed above.
http://www.credit.org

Will the Real Non-Profit Please Stand Up

When I was conducting research for this article, I did an Internet search for the phrase non profit debt help using Google. Within the "sponsored links" part of the results page, I saw a handful of listings from companies claiming to be non-profit. But when I clicked through to their websites (and did a bit of follow-up research), I found that many of these were regular companies without non-profit designation. In other words, they were using that key phrase as a bait-and-switch tactic, just to get me onto their websites.

There is a certain "Christian" debt consolidation company, for example, that runs Google ads depicting itself as a "non profit credit counseling" organization. But when I visited their website, I could find nothing that indicated they were a non-profit. So I emailed them and asked about it. I didn't hear back from them for several days, at which time they informed me that the debt counseling part of their business is non profit. Huh? What does that mean? You are either an accredited non-profit (IRS code 501c) or you're not. There is no half and half. There is no "sort of" non profit. So this company is pitching their organization as something it's not.

Is this unethical? Absolutely. They are tricking people with false advertising to get them in the "front door." But you should know that this kind of thing happens all the time.

Just because a company claims to be a non-profit debt counselor doesn't make it so. They must have 501(c) designation with the IRS to meet the official definition of a non-profit organization.

Bottom Line: Use one of the three organizations I've recommended above, and you'll be in good hands. There are many profit-driven companies who claim to be non-profits, just to lure you in. Now you know the truth.

No Credit Check Loans - Forget About It

About once a month, I do a round of keyword research to see what kinds of credit-related phrases people are researching through Google, Yahoo, etc. This month, I was surprised to see how many people are looking for information about no credit check loans online.

If you're not familiar with this type of financing, that's because it doesn't really exist anymore. But you can still find a lot of websites offering loans with no credit check required. The idea here is that, in theory, you can walk into the office of a financial company and qualify for some type of loan with no credit check whatsoever.

However, if you've been watching the news lately, you'll realize that this type of business model is becoming a thing of the past. In fact, risky loans made to unqualified borrowers is one of the primary reasons our economy is in such terrible shape today. Because of this, the qualification criteria for most types of financing has become stricter. For example, in order to get approved for a mortgage loan in today's economy, you'll need a good credit score, a sufficient down payment, and a favorable debt-to-income ratio -- more so than in the past.

Some, like myself, would argue that this is the way it should be. Lending standards and criteria are good things, because they protect the credit markets from excessive default. This is where credit scores come into the picture. While it's not the only criteria needed to get a loan, this score does offer a degree of insight into a consumer's financial responsibility (or irresponsibility).

For all of these reasons and more, no-credit-check loans are scarcely available today. Let me rephrase that statement. Legitimate loans are not available without a credit check process. If somebody offers you a no-credit-check loan in today's economy, it should set off warning alarms in your head. It's probably either (A) some form of payday loan in which you'll be gouged by incredibly high interest rates, or (B) some kind of scam designed to take advantage of desperate / unqualified borrowers.

Legitimate lenders will check your credit before lending you money. This goes for personal loans, student loans, mortgages and other types of financing. It's a sign of our times, and it's a truth that modern consumers must accept.

Fix Your Credit to Get a Loan

The no-credit-check loan is not a financial solution. It's a symptom of a bigger problem. In most cases, it means the borrower is trying to avoid a credit check because his or her financial history has resulted in a bad score.

We all have mistakes in our past, so I don't plan to get up on a soapbox and preach. Instead, I'm simply going to offer this piece of advice. If you want to achieve financial success in the new economy we now find ourselves in -- and you hope to qualify for some kind of loan in the near future -- you need to build a good credit score first.

From the mid 1990s until a couple of years ago, there was a lot of emphasis on "creative financing" methods to extend credit to anyone. These were the days of easy lending and easy credit: Every should qualify for a mortgage loan, we just have to find creative ways to make it work! This is also the period when the no-credit-check loans and subprime mortgages came into fashion.

And look where this financial laxity got us. Record-breaking numbers of home foreclosures swept across the United States, as millions of homeowners defaulted on their mortgages. Property values plummeted. The housing market collapsed. Our economy as a whole collapsed. Thousands of business have failed across the country. Unemployment rates have spiked. And phrases like "toxic assets" have become household terms. Nearly all of this can be traced back to the days of easy credit and lax lending.

As a result of all this (and we still haven't seen the bottom yet), we find ourselves in a new economy where stiff lending criteria are back in style. This is why a good credit score is so important. The days of no-credit-check loans are behind us. So people with low scores, excess debt, and other financial problems will find themselves with very few financing options.

What can you do to prepare yourself for this "new world"? You can start improving your financial picture. You can reduce your debt and improve your credit score. In addition to helping you obtain loans in the future, these types of positive changes will improve your quality of life overall.

On this blog, and also on our parent website, you can find hundreds of tips on how to accomplish these goals. Here are a few I recommend starting with:

• How to Raise Your Credit Score Fast in 2009
• Best Ways to Pay Off Debt
• How to Repair Bad Credit

Conclusion and Going Forward

No-credit-check loans are hard to come by these days. They are usually a scam in disguise. If you are seeking this type of loan, it's a symptom of a bigger problem that needs to be addressed. Qualifying for financing is much harder today than it was five years ago. Lenders are going to scrutinize every aspect of your financial background, and that includes your credit score.

Financially speaking, the best thing you can do for yourself in the new economy is to reduce your debt and improve your credit score. You'll qualify for better loans with better terms if you can do those two things.

Can a Credit Card Company Sue You for Debt?

We have addressed this question before, but it's still one of the most common questions we receive through email. The question is, can a credit card company sue you for overdue debt? So I thought it was time to address it again for new readers.

The fact that we get this question so often is a sign of the times, I'm afraid. As more and more Americans lose their jobs and face foreclosure on their homes, the credit card bills fall to the bottom of the priority list. I can see the logic in this. In fact, most personal finance experts recommend this very thing -- protecting the home first, and dealing with unpaid credit cards later on.

So let's get to the question at hand. Can a credit card company sue you for failure to pay? The short answer is yes, a card issuer can sue you in a court of law. This should come as no surprise really, and I think that deep down most people realize this truth. After all, you sign a type of contract with the company when you obtain the credit card, and that contract is legally binding for both parties.

They Can Sue You - But They Can't Harass

Yes, a credit card company can sue you in a court of law for failure to pay your debts. We have covered this much already. But there are several things they cannot due, so we should address those as well. Neither a credit card company nor a collection agency can threaten to sue you, or otherwise scare you into paying. They are also prohibited by law from contacting you at work or at weird hours of the day.

Additionally, if you tell a debt collector (in writing) to stop contacting you, they must abide by that request. They can still sue you for the debt, but they have to honor your written request and stop contacting you.

When I mentioned the law in the previous paragraphs, I was referring to the Fair Debt Collection Practices Act. If you are behind on your card payments, and you're being contacted by debt collectors, you should read through this federal law. The link provided above takes you to the Federal Trade Commission (FTC) website, where you can get a summary of the act.

Can the Card Company Garnish My Wages?

This is another common question we get, and it's a logical follow-up to the first question presented above: Can a credit card company sue me for debt? Once again, the answer here is yes. A card issuer could garnish your wages, but only as part of a court decision. Let me stress that key stipulation again. Before a card company can tap your wages or your bank account, they must (A) sue you, (B) win the court case and (C) get court approval for whatever action they are seeking.

A lot of federal benefits are exempt from garnishment (i.e., they cannot be touched by a credit card company or anyone else). This includes Social Security payments, military / service member's pay and more. For a complete list of exempted benefits, visit the link provided above to the Fair Debt Collection Practices Act.

So let's summarize what we have discussed in this lesson. Yes, a credit card company can sue you if you fail to pay your debts. If you feel the company has acted illegally, you should contact your state attorney general's office. If the courts side with the card issuer, they might be able to garnish your wages or your bank account (with the exception of certain federal benefits that are exempt from such action).

Related articles:

• Can a collection agency sue me for overdue debt?
• What happens if you do not pay your credit card?

I hope you have found this lesson helpful. Remember, there are more than 170 articles and tutorials on this website. So if you have additional credit-related questions, try using the search box at the top of the site.

What Do Credit Monitoring Services Do?

In my articles in the past, I've mentioned credit monitoring services, and how they offer free credit reports as an enticement to try their services. Up until now, however, I've never explained what these monitoring companies provide to their customers. So let's take a closer look at them today.

Monitoring Consumer Credit

The services offered by credit monitoring companies will vary from one company to the next, but they all do basically the same thing. They monitor your file with one, or possibly all three, of the credit reporting companies (Equifax, TransUnion and Experian). The idea is that if somebody tries to use your identity for some kind of financing, such as an auto loan, you'll find out about it right away.

At the time this article was published, I could not find any statistics on how well these credit monitoring services work -- i.e., how many cases of identity theft have been spotted by monitoring. However, the better services will check your credit files every business day, and they'll notify of you all new activity. So I can only imagine they're an effective way to spot fraudulent activity.

Sure, you can look at your credit reports for yourself, and you can obtain them once a year for free for this very purpose. But the added benefit of a monitoring service is the daily vigilance they provide.

Do You Really Need It?

Do you really need a credit monitoring service to protect your identity? Ultimately, this is a personal choice. Most people go their entire lives without being the victim of fraud. But the minority of people who fall victim to identity theft would probably tell you that monitoring is a good idea. So it really depends on whom you ask.

On the other side of the fence, some consumer groups say that credit monitoring services are often not worth the money. Or at least, that they weren't in the past. But these same groups concede that ID theft protection is getting better all the time.

According to this Consumer Reports article, ID fraud protection services could "overtake credit-report monitoring as an effective identity-theft tool by year-end 2009." By the way, when they refer to fraud protection services, they are talking about comprehensive identity theft protection, as opposed to credit monitoring alone.

If you take your financial and identity security seriously, then you may find that the small monthly cost for credit monitoring service is worthwhile. Some people will feel differently. Like I said, it's a personal choice.

Where to Find These Services

If you want complete coverage, you should sign up for a service that monitors all three of the credit reporting bureaus. These three companies do not share data, so it's possible to have fraudulent activity on one credit file but not the other two.

To find such comprehensive coverage, I recommend visiting Credit.com. They offer credit monitoring services that will watch all three of your bureau files. You can also sign up for monitoring through the bureaus themselves (Experian, Equifax and TransUnion), but this will only provide coverage for that one bureau.