Free Debt Relief Programs: Not Even a Penny?
Looking for a free debt solution? There are no real free debt relief programs. There are free debt relief scams or false advertisements, claiming that there are free debt relief programs, but you know better. You owe money because you borrowed from a lender or credit card company, or did not pay for a service you received, like a hospital bill.
Owing money is not a crime, even if unscrupulous debt collectors say so. However, a creditor lawsuit can lead to wage garnishments, bank levies, or liens on your personal property. If you want to overcome your debt problems, then you will need to make a real effort. That means investing your time and resources.
Don’t expect to find a free debt relief program, but take steps to make it less expensive. You can do just about any debt relief program by yourself: however, be careful because a mistake is costly. Make sure that you learn about the programs and are active in all the steps toward debt freedom. Also, utilize any critically needed professional help, even if it is not free.
To help you overcome your debt and find a debt relief program appropriate to your situation, follow these FREE steps:
- Find ways to save money
- Request Government Hardship aid
- Educate Yourself about debt relief programs
- Explore programs through Free consultations
Find Ways to save money
An excellent place to start with your debt relief program is your budget. While bringing in extra income is difficult, it is easier to look for ways to save money. Cutting down on expenses like cell phones, cable television, insurance premiums, or groceries frees up cash to pay off debt.
Make and maintain your budget. It takes time, organizational skills, and very little money. Any debt relief program you use will require that you have a working knowledge of your budget. If you don’t know how much you make, how much you spend, and how much you can afford, how can you find a debt relief program?
Some of the most common tips are: to avoid impulse-shopping, pay in cash, and do comparison-shopping. Use the Bills.com Emergency Fund Calculator to see if you are saving enough.
If you are in hardship, look for government assistance.
Request Government Hardship Aid
Not everyone is eligible for government aid. You will need to show a real hardship, as any government plan has strict eligibility rules. Check with your states Dept. of Human Resources for various programs, including medical, food, and even cash assistance. While these programs will not directly solve your debt problems, they will give you additional resources to improve your situation.
Many people who qualify for hardship and receive government assistance will benefit from state and federal laws protecting their income from wage garnishment. If you are facing lawsuits for bad debt, then seek the help of legal counsel. Call your county bar association and ask for the names of the organizations that provide no-cost legal services to people with low or no income in your area. Make an appointment with one of the organizations, and bring all of your loan and debt documents. The lawyer you meet will advise you accordingly.
If you have federal student loans, there are special programs, including deferment, forbearance, and income-based payment plans. Visit the Dept. of Education’s website for more information about student hardship repayment plans and disability programs.
Educate Yourself About Debt Relief Programs
Educating yourself and making the right choices is the heart of the free part of a free debt relief program. To find a solution to your debt problems, you must be proactive. Setting up your budget and saving money is an excellent start. Knowing how much you can afford to pay each month is a vital first step in looking for a viable debt relief program. Here is a brief outline of different debt relief programs:
Optimizing Loan Payments
The Plan: If you have a good cash flow, then make larger payments on your credit cards. Use the Bills.com snowball debt calculator to learn how much you can save by making fixed payments on your credit cards instead of minimum payments. Also, accelerate your mortgage loan payments and other installment loans
Free? Paying back loans or credit cards is not free. Nevertheless, you will save a lot of money by optimizing your credit card and loan payments. The best thing, you can do it yourself.
The Plan: If you have good credit, a low DTI, and equity in your house and you want to find debt relief through a lower interest rate and lower monthly payments, then a cash-out mortgage refinance is a good debt relief options. Although you will stretch out your payments by making them affordable, you will be able to meet your obligations.
Free?: Taking out a mortgage is not free. There are substantial fees associated with a mortgage. You can’t take a mortgage without a lender. Your other alternative is a debt consolidation loan, which also has expenses. I recommend you shop around.
Credit Counseling and Debt Management
The Plan: If you have trouble making your payments, but can still afford the current minimum payments, then credit counseling and debt management are good debt relief solutions. You will receive budget counseling to help you set up your finances. If you are deemed fit, then a debt management plan is recommended. You will pay back all of your enrolled debt in a debt management plan, over five years. The debt management company negotiates lower fees and rates with your creditors. You make one payment to the debt management company, which then funnels the money to your creditors.
Free?: Credit counseling has regulated upfront and monthly fees. Debt Management companies take monthly fees for their services. These professional services charge you money, but provide a service, for many, that is difficult to do alone. If you are disciplined, then make a reasonable payment plan you can stick to and try to negotiate lower rates.
The Plan: If you are struggling and can barely afford your minimum payments, or worse, then debt settlement is a good debt relief option. You stop paying your creditors, take a hit in your credit score, and make payments into a designated account, in your name. The debt settlement company negotiates a payoff, which varies, but can be around 50-70% on average, of the original balance, including fees. This does not include the savings from interest and fees that accumulate. Make sure that you do not pay a debt settlement company any upfront fees. Only pay when a successful negotiation and payoff takes place.
Free?: Debt resolution is a tough program to do on your own. Reputable debt settlement firms (look for AFCC first-tier membership) have developed negotiation skills to get you a reduced payoff. You will receive a free consultation that evaluates your financial situation to help determine if you are a good candidate for a debt settlement program, including your ability to meet the monthly payments. Debt Settlement is not free, as the debt settlement company takes a fee. (Once again, don’t pay upfront fees). However, some companies speak as if this is a free debt relief program, because you don’t pay upfront fees, and you end up settling your debt for less than you owed. Free money? Actually not. You still have to make your payments and your fees. Your credit is hurt, which costs you in other areas. However, for the right person, debt settlement is a good option.
The Plan: If you are in a real hardship and cannot afford your monthly payments, then consider bankruptcy. A chapter 13 bankruptcy is a court-supervised payment schedule, which protects you from creditors, while you make the payments. A chapter 7 bankruptcy discharges the eligible debt.
Free?: Even though you are in hardship, bankruptcy costs money, including court fees and legal fees. I do not recommend filing bankruptcy without legal aid. If you cannot afford it, then look for free or low-cost legal assistance.
Explore Programs Through Free Consultations
No matter which debt relief program you choose, make sure you get a free consultation. Don’t pay a broker, lawyer, credit counselor, or debt settlement adviser for an initial consultation. The purpose of a first meeting is to determine whether you are a good candidate for the program.
An honest adviser will point you in a different direction if they cannot offer the right debt relief solution. Preparing for the meeting will save everyone time and make for a more efficient and productive meeting.
Remember, if you follow all the FREE steps, you may not get a free debt relief program; however, you will be on the road to debt freedom.