What is free debt consolidation?

You’ve probably heard the cliché: “There’s no such thing as a free lunch.” And it’s true. Very few things in life are free. You have to work for them, earn them or pay for them. So then, why are there so many companies out there touting “free” debt consolidation? Well, the truth is that there is, technically, such a thing as free debt consolidation.

And here is how it typically works:

Let’s say you owe one credit card company out there $500, another company $2500 and a third company $3000. Each credit card company is charging you a different interest rate. Each of them expects a different minimum payment every month. But you’re having trouble keeping up with all three. Well, a debt consolidation company specializes in bringing all three forms of debt together to give you a $6000 balance. You will then be assigned an interest rate on that debt and given a monthly payment plan that is designed to help you save money. And all of this begs the question: Well then, how does the consolidation company make money? The truth is that they typically will work their payment into your minimum monthly payment. However, they will do so in a way that still saves you money in the long run. Of course, there are some exceptions to this rule though so continue reading to find out how to avoid getting scammed and how the experts define “free” debt consolidation.

Why “free” is better than overpaying for consolidation

In this video, financial guru Suze Orman explains why you should consolidate or settle your debt without using a company that charges you extravagant prices for their services. In some cases, you can even tackle debt on your own.

Tips for getting your “free” debt consolidation

Any qualified debt consolidation expert will tell you that you need to be careful when consolidating your debt. There are many scams out there designed to make you think you’re saving money by consolidating when you’re really not. Here are some tips that a professional debt consolidator would tell you:

1.Don’t pay any upfront fees: When you’re struggling to pay off debt, the last thing you need is to pay out extra money to consolidate it. Yet, millions of Americans pay upfront fees for debt help every year in the hopes of consolidating your debt. A qualified consolidation company should be helping you, not hurting you. Make them work for their money while helping you to save yours.
2. Make sure all your questions are answered: It’s not a surefire way to test a consolidation company, but any company that wants your business better be able to answer every question you have. Explain your debt troubles and let them provide answers about how to best handle your situation.
3. Always find out what fees you’ll have to pay before you consolidate debt: Will you be required to pay a percentage of the money you save to the consolidator? Will the consolidator charge you a small fee every month? How much will you pay the consolidator every month? You need to find out what fees you will be charged. Expect some—but don’t tolerate too many. Likely, you will need to pay a small fee every month for the consolidators work with you. But in the long run, you need to make sure you will still be saving money.
4. Pay your consolidator ON TIME: This could be the most important tip out there. Should you fail to miss even just one payment, a consolidation company has the right to drop you from your consolidation plan. You’ll be in worse shape than you were before and you will have gone through the consolidation process for nothing.
5. Don’t expect a miracle: Debt consolidation is hard work. It is more clear-cut than trying to pay down your debt alone but it still requires a lot of effort on your part. Don’t make things more complicated by falling for a scam either. Ask plenty of questions as you begin the consolidation process.

When consolidating your debt, it’s important that you look out for potentially harmful scams. In this parody of a debt consolidation scam, “MC Scammer” makes promises that he knows he won’t keep.

How to know you’re being scammed

It can be hard to tell when a debt consolidation company is scamming you. But it happens quite often. Here are just a few ways you can tell if you’re possibly about to become the victim of a debt consolidation scam:

1. Companies who quote incredibly low monthly payments: Many of these payments are just low-balled estimates. If you fail to recognize this, you could start off in a program with a monthly payment that’s way higher than you believed it would be.
2. Companies who charge high upfront fees: Some companies will try to get you to pay thousands of dollars for their services. In some cases, they may even promise that you’ll get your money back when you complete your consolidation program. But if you fail to complete the program, they keep the money. In general, avoid any upfront fees. And contact the Better Business Bureau if you believe you’re being scammed.
3. Companies who request your bank account number before they quote you: This information is not necessary for them to work out a plan based on your debt. Avoid giving it to them until you’ve signed up for the consolidation process.

Where to find a non-profit debt settlement professional

If you plan on consolidating your debt or settling with your credit card company and you need help doing it, consider going the non-profit route. Of course, you need to be careful who you deal with but a non-profit can get the job done for you without nickel and diming you throughout the process. And they usually provide the “free” debt consolidation that you’re looking for, too. Here is a list of 15 non-profit debt settlement professionals who will work to help you eliminate your debt quickly and easily.

Christian Debt Consolidators
Deerfield Beach, FL
866-958-3328

United Financial Systems
Margate, FL
800-510-8765

InCharge
Orlando, FL
877-486-7995

Debt Management Credit Counseling Corporation
Deerfield Beach, FL
954-418-1466

Consolidated Credit Counseling
Fort Lauderdale, FL
800-320-9929

American Consumer Credit Counseling
Auburndale, MA
800-769-3571

The Credit Exchange
Santa Ana, CA
866-694-7434

CareOne Credit
Columbia, MD
888-888-CARE

Christian Debt Services
Boca Raton, FL
800-839-0736

Clear Debt Solution
Las Vegas, NV
888-207-4455

U.S. Debt Relief
New Port Richey, FL
800-481-5922

Debt Free Christian
La Mirada, CA
800-624-9747

Credit Solutions
800-353-7630
Dallas, TX

Consumer Credit Counseling Services
St. Louis, MO
888-656-2227

Clear Debt Solutions
Woodbury, MN
888-207-4455

What is free debt consolidation?

Why “free” is better than overpaying for consolidation

Tips for getting your “free” debt consolidation

How to know you’re being scammed

Where to find a non-profit debt settlement professional

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