Can you tell me the difference between debt settlement and debt consolidation?

First, debt settlement and debt consolidation are completely different things.

Debt consolidation: several or many separate debts are combined into one; a single loan is taken out to pay off and replace the other debts. Not only does this simply a person’s debt (only one bill to pay), but the debtor can usually stretch out the time to pay in the process of taking out the new loan, lowering monthly payments; and can also often reduce the interest rate, particularly if higher-interest debt (like credit card debt) is replaced by lower-interest debt (such as a home equity loan).

Debt settlement: in its most basic form, creditors agree to accept less than full  payment as payment in full, such as if they believe that it’s unlikely they could recover the full amount anyway from a distressed investor. However, in the context of debt settlement companies, whether nonprofit or not, the company often sets up a payment plan to receive payments from the debtor—which are then banked until a favorable settlement is worked out with creditors. Unfortunately, there is no right to do this—if you don’t pay creditors, they can report you to credit-rating agencies and/or sue you. So debt settlement sometimes turns into a dangerous game of “chicken” between the debtor and the creditors, with the debt settlement company standing on the sideline, egging the participants on, but not actually putting its own skin in the game. (In other words, your failure to pay doesn’t hurt the settlement company.)

As for whether non profit debt settlement or nonprofit debt consolidation is somehow better than for-profit: not necessarily. In theory, a nonprofit should have a lower cost structure and less incentive to put its own interest ahead of that of the debtor.  In practice, there are badly run nonprofits and criminal nonprofits, such as there are badly run or criminal for-profit entities. Evaluate whether a nonprofit is good or not based on recommendations, doing web searches, contacting the better business bureau, checking that their nonprofit status is valid (it’s easy to say you’re nonprofit), and on whether what they say is credible or not. For example, no one can guarantee a favorable settlement, since creditors must agree to it—if anyone “guarantees” a successful outcome, run, not walk, to the exit.