What Kind of Free Debt Relief Services Are There?
Do you need help getting out of debt? Wondering what kind of free debt relief services might be available to you?
If yes, don’t fret. It’s becoming increasingly common for middle-class families to be sitting on a mountain of it! Many people don’t realize that getting out of debt may mean taking advantage of free debt relief services.
Here’s what you can expect when you start taking inventory of your debt relief options.
Are Free Debt Relief Services Right For You?
Free debt relief services is often used interchangeably with the term “debt consolidation”. It refers to a process by which individuals can get out of debt faster and more efficiently. In contrast to making minimum payments on all of their credit cards and personal loans.
If you’re struggling to get out from underneath many financial obligations, it may be time to look into debt relief.
Here’s how you can tell if you are primed and ready:
Hit the Pause Button on Credit Spending
If you’ve cut up those credit cards it may be time to seek consolidation or another credit card debt relief program.
If you’re ready to hit the pause button on spending it may be time to consider this option.
Living Within Your Means
In spite of high credit premiums, if you are okay with living within your means, it’s time to talk about free debt relief services.
Hold the Phone
Okay, this sounds too easy.
Accrue a pile of debt, cut up all your credit cards and call a consolidation or debt relief company. That about sums it up, right? Before you pick up that smartphone, make sure you know who you are going to reach on the other side.
A number of companies claim to offer free debt relief services but they actually get you into more financial peril. Even a company touting non-profit status can potentially have pitfalls.
Here’s what to watch for:
- Say NO to interest rates equal or higher than what you pay currently
- Avoid consolidation services that want to work with you even if you have a minimal debt to work with
- Avoid services that approve you without first running a credit report
- Stay away from companies that push you to sign before you’ve had a chance to think about it
- Don’t sign with companies that want you to pay fees before settling debt
- Look for “scammy” language about “government programs” or other trusted establishments without any evidence of real affiliation
- Reconsider ending communication with creditors on behalf of a consolidation company
- Run if they guarantee unrealistic debt reduction for dollars and cents
While free debt relief services are out there and ripe for the picking beware. There are far too many organizations willing to take your money without reducing your debt. Stay away from these red flags and trust your gut if you get the feeling things may not be legit.
It’s your money on the line, protect it.
Free Debt Consolidation Options
Now that you know what is NOT free debt relief services, here’s some examples of programs that may be able to help you better your financial situation:
Non-Profit Debt Management & Consolidation
Two services offered by non-profit debt reduction organizations are debt management and consolidation.
A debt management program is where you typically don’t have to take out a loan to pay off your creditors.
The program is structured through a third party one of several debt consolidation loan companies. They negotiate with creditors to pay a reduced rate on your behalf.
You, in turn, make one lump sum payment to the debt management company. They in turn pay all of your creditors using the agreed upon monthly rate.
This helps people in debt pay a more affordable fee when they have too many credit cards to negotiate themselves.
If your debt comes from just one or two cards, you should call each creditor and work it out yourself.
On the other hand, debt consolidation is the process where a person having financial trouble is issued a consolidation loan. The loan is used to pay creditors. And the payer obligation is transferred from the individual credit companies to the lender.
Debt consolidation lending is tricky. If you aren’t careful you could end up in a situation with higher interest rates. That’s why it’s important to work with a reputable non-profit organization or government debt relief loan programs to find the best debt consolidation loans.
Balance Transfer Credit Cards
Another option is transferring the balance from high-interest cards to a balance transfer credit card that has a lower rate.
In doing this, payments are consolidated to one source. The new card and interest rates are lower so you pay less over time. This allows you to cut through debt a lot more quickly than you otherwise would.
Debt settlement with an attorney or a settlement company in the finance industry can be a good option too. But only for people in severe debt.
Through debt settlement, you can reduce your debt up to 50%. That sounds like a great idea, in theory, but in practice debt settlement can get messy. In fact, it can leave you hanging out to dry.
That’s because settlement comes with a high degree of risk. Debt settlement organizations and attorneys often try to get you to stop communicating with creditors. In theory, this forces them to negotiate with your chosen third party.
During this period your credit score will likely plummet and you could find yourself being served with lawsuits.
If you are in way over your head, partnering with a legit settlement firm or looking at a few government debt relief programs might be worth the risk. But if, and only if, you can’t handle it another way first.
The Final Scoop on Getting Out of Debt
Free debt relief services offer unique ways for people in debt to recover and get their life back. But not without a cost.
Reducing debt is risky enough when you’re working with a legitimate company. However, scammers are out there keeping consumers skeptical of debt programs that could benefit them.
If you want to find a good way to reduce debt without falling victim to an illegitimate organization, here’s how:
- Check with the National Foundation for Credit Counseling
- Association of Independent Consumer Credit Counseling Agencies before signing anything
- Research complaints through your local Attorney General’s Office, Better Business Bureau, and Consumer Protection Agency
- Remember, Google is your friend
With these tips, you too can be free of the constraints of debt. For more information on debt relief, click here.
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