How to Choose Between Fee and Free Debt Relief Solutions

[May 28, 2009.]

 

For many of us, it takes a major life event to force us to wake up from our financial coma and to get out of debt. Fights, illnesses, and divorces often act as turning points in our lives that challenge us to step up and face our fears about money. Each of us arrives at that place with a different set of resources. For some Americans, debt relief may mean restructuring credit card bills and adjusting spending habits. For other borrowers, to get out of debt may mean finally having cash in a wallet on the day before payday.

Reaching out for help from a debt relief program can be tricky and confusing, especially with so many debt consolidation scams operating under the radar. In some cases, a free debt consolidation program that seems too good to be true can actually make a difference in your life. Other times, a debt consolidation program with high fees can actually do more harm than good. Review these five steps to discover whether you can get the debt relief you need from a non-profit organization or from a paid expert.

Understand the mission behind the message. Organizations can afford to offer free debt relief programs in one of two ways. In some cases, volunteers feel passionate about helping neighbors get out of debt, either through purely personal reasons or as a manifestation of their religious beliefs. In other cases, charities can earn kickbacks by salvaging accounts for credit card issuers and other unsecured lenders. Knowing what debt relief counselors and agencies get from their involvement with you can help you evaluate their legitimacy and effectiveness.

Get clear about your own commitment. Free debt relief programs sometimes don’t work because participants don’t have enough at stake. Paying for debt consolidation often forces participants to feel the pain of taking an extra scoop from the budget every month. If you can keep yourself motivated without as much external force, a free debt relief solution might be right for you.

Do your homework before making the leap. Search the web for details about your prospective debt relief solution. An organization with too few online references could be brand new, or they could be a front for scam artists. Even when debt relief services cost you nothing, review case studies to understand what worked and what didn’t work for past participants.

Keep your hands on your checkbook, your bills, and anything else you’ll need to get out of debt. Scam artists frequently target debtors who have become overwhelmed by debt. Although some legitimate debt relief organizations may require you to submit your bill payments through them, you should always confirm with creditors that funds reached them on time. Use money orders or a dedicated free checking account to keep potential thieves away from your bank balance.

Remember that no single debt relief solution works for everyone. Just as we all don’t live in identical homes or drive identical cars, not every debt relief program will get the same results for all participants. If one or two participants failed to get out of debt using a particular system, that’s normal. If a high percentage of participants report failure or fraud, find an alternative solution.

Finding free debt relief can be hard, especially with so much static about the subject on the web. Start by using trusted news sources and bulletin boards to research free debt relief programs offered online or in your area. If you feel pressure to enroll in a debt relief solution right away, take a day to cool your heels and talk things over with a trusted friend or advisor. Finally, remember that you are always in charge of your relationship with money. Debt consolidation may set you up for success, but the best program for you is one that will help motivate you to reach your goal.

 

About Author:

Joe Taylor Jr. is an internal business consultant for a Fortune 500 company, who writes about finance, culture, and design. He holds a Bachelor of Science in Communications from Ithaca College.