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Free Debt Consolidation Programs May Still Cost You
Free Debt Consolidation Programs May Still Cost You
By
Wendy Clay
on June 14, 2012
There are numerous non-profit debt counseling organizations offering debt consolidation programs that enable those burdened with debt to reclaim their financial freedom by making debt repayment more feasible. Such programs allow a third party (the organization offering the consolidation program) to deal directly with your creditors on your behalf. While some organizations offering debt consolidation programs are for profit and others are non-profit, the way in which each type of organization structures their consolidation programs is very similar, but you will likely want to seek a non-profit organization for a free debt consolidation program.
Before beginning a debt consolidation program, one must find a reliable debt relief organization preferably
one that is listed with the Better Business Bureau
and that you can obtain reviews from prior clients for. Once the best organization has been found, the next step is to schedule a free counseling session with a consultant to analyze your financial situation, create a budget, and determine the exact amount you can afford to put towards debt repayment each month. At the end of the consultation, it may be found that debt consolidation is not the best option for your financial situation, but if you are advised to proceed with a debt consolidation program, you will then have to sign a power of attorney form that will allow the consultant to handle all interactions with your creditors on your behalf. After you grant your consultant the power of attorney, they can begin contacting your creditors to negotiate lower monthly payments, lower interest rates, and forgiveness for any late fees or extra charges accrued on your accounts. Once the negotiations are complete, you then stop sending your bill payments directly to your creditors and instead send them to the debt consolidation organization which will then disperse it to each of you creditors.
The major benefits of debt consolidation programs are that they: help eliminate collection calls (since they will begin going to your consultant rather than to you); reduce your number of monthly debt payments to one; and lessen the amount of time it will take you to get out of debt (by
negotiating lower interest rates
and forgiveness of fees). These benefits are wonderful, but it must be noted that even “free” debt consolidation programs are not totally free. In many cases non-profit organizations charge enrollment fees and/or monthly maintenance fees. With this in mind, the only way a debt consolidation program will truly be free is if the organization waives the fees.
Sources:
Debt Management Program Review.
American Consumer Credit Counseling, Inc., 2012. Web. 4 June
2012 <http://www.consumercredit.com/debt-management/debt-management-program-review.html>.
Marman, J. H.
Debt Consolidation a Legal Solution to Your Debt Problems.
Oak View Law Group, 2012.
Web. 4 June 2012` <http://www.ovlg.com/debt-consolidation/>.
Nelly, Good
Debt Consolidation Program Lowers Rates and Monthly Payment.
2012. 4 June 2012
<http://www.debtconsolidationcare.com/program.html>.
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