No Fee Debt Consolidation

A Credit Article Contributed by Kris Griebe

What is Debt Consolidation?

The process of debt consolidation is simple. By taking all your existing debts, from many sources, and condensing them into one source, you can decrease the payments you make on a monthly basis to help you better manage your debt.

Thousands upon thousands of people around the world have rising debts that they just cannot manage. For this reason, there are many organizations devoted to debt consolidation for free. All you have to do is search the internet to find hundreds of these organizations willing to help you out.

How Do I Know If I Need Debt Consolidation Help?

Do you have monthly payments on your debt that are so large you just cannot manage them? Does it seem like you pay every month, yet the amount you owe never seems to decrease? If so, then you need the help of a debt consolidation team.

Some services charge to help you do this. But ask yourself this one question, "Why should they charge me when it is obvious I am having financial difficulty as it is? "

Good point. They shouldn't. They would argue that they are providing a service, and that service requires payment, but why work with them when there are others willing to help you out for no cost?

How Does Free Debt Consolidation Work?

Two of the most common situations are as follows:

You contact a free debt consolidation service. They in turn contact everyone you have a debt with. By working with these people, they consolidate your debt into one lump some (sometimes by paying off your debtors and issuing you a loan themselves). By settling these debts, they make money. How do they do this? Well, by making a lump sum payment, they can sometimes reduce the cost of the total payment. Then, as you make your payments, you end up paying the difference, which is kept by the consolidation company. Thus, they make money, while still making your life simpler.

Another scenario is: Debt consolidation firm A contacts all your debtors. They offer to guarantee that the payments are met on time, in return for a reduced payment rate. They then get the interest rate on the debt reduced. Debt consolidation firm A makes your monthly payments to your debtors, and you in turn pay your monthly payments to Firm A. The difference between what you pay, and the new negotiated pay rate and interest rate, is kept by the firm as a fee.

So, you might be thinking, "Doesn't this mean it isn't free? " The answer would be yes, it may not be entirely cost free, but it is free in the sense that extra money is not coming directly out of your pocket. And the peace of mind is priceless!