non-profit debt consolidators

Can anyone tell me the pros and cons (most specifically the cons) of using debt consolidators that are "not for profit" or ".org" companies?

Also, most of them say that there is a start up fee as well as a "small" monthly fee that they charge but I can't seem to find anyone who knows exactly how much those fees are. Do they charge per debt load or is it the same for everyone?

Thanks!

If you've been looking into to these, I'm sure you're aware of the the upside, like lowered finance rates, waived overlimit fees, sometimes they waive late fees, and making one payment for multiple accounts.

There are different opinions on what such a program does to your credit rating and I'm not sure which is correct. Some people say that it doesn't look bad because it shows that you have taken the initiative to pay off your debt. Since having a debt reduction program is basically asking the creditors to change the terms of the agreement, it may not look so favorable on a credit report. They all do charge a fee. This will vary between the different services. Some will charge percentage and some a flat rate (which I believe is around $30 a mo.). Some will also reqire a deposit of about $100 and will return it when you complete the program. However, if you do not complete the program for any reason, they won't give you your deposit back. Debt reduction programs are not all alike and it does pay to shop around. Also, some cc companies only work with certain programs, so be sure to find out before you sign on. Personally, I wouldn't use one except as a last resort to keep from bankruptcy, but if you have credit cards that are over the limit and you can't afford anymore than your min. payments, (on time to avoid late fees) it's a good deal. Hope this has helped. I'm not an expert, but at one time looked into this myself so all this is just based on my personal experience.

It most certainly HAS helped! I consider myself to be a whiz with finances and have recently started helping a couple of friends with theirs. They are what I consider to be "close to bankruptcy" so that's why I am checking out these option. Your point about the affect on credit ratings is especially appreciate. I hadn't thought about that side of it. And thanks for the fees/deposit info.

[JETX]

One BIG warning about these "debt consolidators". Guess who they work FOR?? If you said the creditors, you would be correct. So, the minute that you have completed your 'application' (the one with ALL of your current data on it), guess who has access to that data, even if you do NOT 'join'??? That's right. The very creditors that have been hounding you!!

Here is an excerpt from one of them....
"How are you funded?
The majority of our funding comes from voluntary contributions from creditors who participate in Debt Solver ProgramsTM, or DSPs. Our DSPTM serves the dual role of helping you repay your debt and helping creditors to receive the money owed to them.

Since creditors have a vested financial interest in getting paid, most are willing to make a contribution to help fund our agencies. These contributions are usually calculated as a percentage of payments you make through your DSP."
[What they don't tell you is... "with our 'special' relationship with the creditors, we all sleep in the same bed!"]

Be very careful who you give your information to and what they do with it!

What CAN they do with my info? I'm sure I sound naive here (thank God!) but if I'm in a financial situation where I'm getting hounded by creditors and I'm up to my neck in debt, what diference does it make if they see just how much trouble I'm in?

So you would concur that debt consolidators should only be used as a last resort before bankruptcy? A couple that I'm working with say that they have talked with one such agency that told them to file bankruptcy. Why would a debt consolidator EVER tell a potential paying customer to "go away"?

Just wanted to add that even though the programs I looked into said they were "debt consolidators" they really aren't. You make one payment to them, but all the accounts on the program remain seperate. You would still receive statements from each, and each will coorperate with the agency to a different degree. For example some may waive late fees, and some may not. This is completely at their discretion. If your friends get on a ccs program it would be a good idea for them to contact the creditors and make sure they're clear about their terms first hand. These programs claim to handle everything for their clients, but it's not a good idea to leave it all up to them.

[bigun]

One more caveat as it relates to Halket's ecellent advice.
Get the current issue of Kiplinger's magazine. There is an article on bankruptcy. The author states that 2/3's of the people who file chapter 13 eventually convert to a chapter 7. Now, many describe debt consolidation services as an informal chapter 13. The numbers I've seen say 70% of people entering the program never complete it.
The service you say recommended bk to your friends may well be a good one. The know a lost cause and recommended the action to take.
I'm sure Halket can flesh this out but, if you could be in an adversarial position with creditors, the less they know about your current finances, the better.
I'd also recommend you visit the Motley Fool site. It has a personal finance board that is quite active. Post some of your friends specific situation and see what other ideas people may have.