Free debt Management — The trickiest service to grab your money
You can see many advertisements that tell you about free debt management services. The best and surest way to dig yourself out of debt at no cost is to do it yourself. This article makes you aware of the under mentioned aspects:
- What are non-profit debit management organizations and how they help people?
- How non-profit debt management organizations get funded?
- Is no-cost debt help and free debt management counseling are same?
Some of the ads may seem too good to be true. On billboards and in the newspaper and magazines, you may see ads for free debt management or free debt management advice. You may wonder whether these offers are accurate – after all, many companies charge plenty of money to get you out of debt. The truth is, if you are in debt, there are some services that you can get yourself at no charge.
The best and surest way to dig yourself out of debt at no cost is to do it yourself. You can get free help from your bank (which, if it like many banks, provides financial information for clients). You can also do the common-sense no-cost things that can help you get out of debt. For example, you can set aside more of your monthly paycheck to repay bills. You can also call creditors yourself to work out payment schedules. Some customers even get extra jobs in order to pay off their bills faster. Of course, the do-it-yourself option works best if you do not have too large a debt and if you have the discipline to follow through on your financial plans.
When many companies advertise no-cost debt help, they are advertising free debt management counseling. This means that when you go in to see a representative at such a company, you will get free advice and free planning help. However, you will still have to pay for additional services. You may have to pay for payment schedules or for loans, for example, if that is what the company offers.
When Free Does not Mean No-Cost
The fact is, even companies that advertise themselves as free do not work for nothing. When you hire a debt management service, you will end up paying in one of several ways:
Some contracts that you sign with debt settlement companies ask you for a voluntary contribution. In many cases, this contribution is mandatory and is clearly defined. Some companies, for example, may ask for a full month’s income check. The word voluntary allows the company to claim its non-profit status, but still ensures that the company gets paid.
Some companies charge up front fees. That means that once you have had a free consultation or planning session, the company will quote you a one-time fee or a monthly fee. As long as you make sure that there are no hidden fees that you are being charged, that fee will be all you pay to the company. It is then up to you to decide whether the fee is too high.
Some companies will charge you a percentage of your total debt amount or a percentage of the money you save or a percentage of the amount of money you pay to your creditors. Obviously, percentage amounts will vary widely depending on what percent you are charged and how much your total is. To make sure that you are not paying too much, be sure that you convert your fee into a dollar figure. If the amount is too high, you may want to seek help elsewhere.
Application or other incidental fees
Some companies will charge you fees for applications, photocopying, registering with the company, and other incidentals. These charges can be in lieu of other fees or they can be on top of other payments you are making to the company already. It is important that you verify exactly what you are paying for so that you do not end up paying more than you can afford.
Of course, all these charges help the companies make money. However, it is important that you select the companies that will help you the most while still keeping costs reasonable.