When in debt, many people are told to seek help from charity debt advisory services, such as the EMMA. The main reason why people recommend these services lies in the fact that they do not charge their clients for the advice they offer. As opposed to charity services, there are, of course, profit ones, which typically charge for their services and advice.
Nowadays, there are three different categories of charity debt advisory services. The main difference between these lies in their ownership structure and the source of their funding. These categories involve Government funded organizations, Creditor funded, and Solution Funded. Overall, each of them has their pros and cons, and they are a better option than profit organizations.
Government funded organizations
Such an organization is staffed with funded advisors and volunteers, who are tasked with offering debt advice to anyone who needs help. The major advantages of government funded organizations include their high level of independence and a highly secure source of funding. However, those who need help may end up waiting for more than eight weeks to consult with an advisor. Also, there is a high chance that the advice will be provided by volunteers, which means its quality might not be of the highest level.
Creditor funded organizations
As opposed to the government-funded organizations, these are funded exclusively by creditors, not the government. The creditors are usually major credit lenders and banks, who have clients in debt, and who are willing to donate money to these organizations so that they can provide the people with sound advice.
The biggest advantages of these organizations include an almost immediate advice. Also, given its charity status, it means that an organization is not focused on making any profit. On the other hand, some of the disadvantages lie in the fact that the organizations are funded by the creditors who have people in debt, as well as the assumption that the advice is usually biased towards the creditors.
Solution funded organizations
These types of organizations mostly provide their services via the internet or phone. Their funding comes from no specified source. Instead, they receive their funding from helping their clients gather all the necessary paperwork and introducing them to a company that is willing to provide a solution.
Some of the pros of these types of charities involve immediate advice, and, of course, completely free services. However, the funding for these organizations is quite unreliable, given that it depends on a small percentage of solutions. Also, even though solution-based charities are not focused on making any profit, they still require enough income from helping their clients to continue providing their services. However, that payment usually does not come from the persons who are in debt.
Which one to choose?
As we’ve seen, every option has its pros and cons. Would you like to wait for weeks before you get your debt advice? Would you like to get advice from the people who are funded by the organization you are in debt to? Or, would you prefer to work with a charity organization that gets paid from introducing you to a debt solution company?
Whatever you choose, it should be by your needs and personal preferences. But, you can be sure it will be a better solution than getting advice from a profit organization.