Free Debt Counseling – How Does it Work?

A free debt counseling session can help you get out of your current debt problems. But you may wonder how such debt counseling offered for free works? Just who would be willing to spend few minutes or an hour working with you in better managing your finances to get rid of your debts once and for all?

Millions of people today are facing debt problems as a result of lavish spending, inefficient financial management, emergency situations that result to huge expenses, no proper savings, not to mention the economic crisis. Consequently, more lending firms, credit card companies, and banks are now chasing after debtors who are unable to pay their financial obligations and loans.

In many instances, loans and collectibles can still be eventually paid-off over time if finances are only properly managed. But the problem is, many people still lack the financial know-how to get them out of their debts. This is where debt counseling comes to the rescue.

Free Debt Counseling – Do You Really Need It?

You can, of course, eliminate all your loans on your own. But the fact that you are facing debt problems today with some loans not paid on time and rising overdue bills, it only shows that your financial management is not effective. It needs to be shaped up and improved to make it work in getting rid of your debts and start living a happy, peaceful, and debt-free life.

Who is Offering Free Debt Counseling?

A number of reputable non profit organizations, such as Christian groups, offer this free service to help the millions of people burdened with debt. Don’t be confused though as there are also non profit organizations that collect a little amount to cover for their expenses for helping people. You have to be circumspect in dealing with some debt counselors though, as there may be others who may ask you to pay upfront payment. This is illegal. There are also legit organizations that offer free debt counseling as well as other services that are not free of charge. The free service is their way of attracting prospective clients for their other services.

How Does Free Debt Counseling Work?

A free debt counseling can offer solutions to various debt problems. In a nutshell, debt counseling is a process of seeking financial advice from a debt counselor by laying down your cards on the table so that the expert can assess the situation based on your monthly budget. They may offer you general tips on how to manage your finances, but if you want a specific road map designed to pay off your debt, you may have to shell out some money.

The debt counseling session is usually given for free, but here’s the catch. One of the recommended solutions to resolve your debt problem is to enroll in a Debt Management Program (DMP). Under this plan, the debt counselor will personally aid you every step of the way in paying off all your debts. This will not happen overnight. It may take several months or years before you can finally live a life free from debt.

However, enrolling in the program will require payment from you. Some may offer a one-time package. But normally, payment is on a monthly basis until your debt is zero. One of the significant advantages of using the debt counseling services is getting bigger savings. Standard loans and debts, especially credit card overdue balances, normally have exorbitant interest rates. This only worsens the problem as your total balance continues to rise due to interest.

The debt counselor can help in negotiating, on your behalf, with your creditors to lower your rate or monthly payment. Or he could also negotiate with a financial firm for a consolidated loan at a lower interest rate. You use the new big loan to pay off your other debts. This makes it easier for you to manage and resolve the problem.

Additionally, the debt counselor can also negotiate for waived fees and reduced rates during the process of paying-off your loans to various creditors; thereby minimizing your total payable.

Free Debt Counseling – Is It For You?

At this point, you should already have a better insight on how free debt counseling works. It is time to make the decision if this one is best suited for you. Initial debt counseling is free, but enrollment to the debt management program already requires some investments from you. However, if you stumble upon an effective debt counselor who can provide you a sound debt management program that can really help liberate you from debt over time, then the money you paid will be well worth it.

Yes, there is such a thing as free debt counseling, but what you need may be more than this free service.