Interest Free Debt Consolidation

Interest free debt consolidation are those processes whereby you roll all of your existing debts into one payment and interest rate, and which do not create an aggregate increase on the interest rate. Interest free debt consolidation companies provide consumers the option of paying back their unsecured credit card debt through a monthly repayment plan. This plan pays off creditors and you will save hundreds of dollars in late fees, interests and over the limit fees. This type of financing helps those individuals that want to eliminate debt without having to declare bankruptcy.

Interest free debt consolidation loans can be a blessing to anyone facing an unsure financial future because of past imprudent spending habits. Interest free debt consolidation can free a person of debt from credit cards, personal loans, store credit, lines of credit, medical bills, etc. This type of financing is not practical in consolidating mortgage or car loans, as they are not deemed unsecured credit.

Many loans are available review on the Internet and one can interact with counselors who will help you fill out a financial questionnaire, submit financial information etc. Just make sure that the company you are dealing with is reputable. Most are and use

modern, encrypted information technology for security. Interest free debt consolidation programs are uncomplicated to use and easy to find. A web search will offer hundreds of companies to choose from. Many interest free debt consolidations organizations are obtainable twenty-four hours a day. Statistics show that more than two million people have been helped with a debt consolidation loan.

Free Debt Consolidation provides detailed information on Free Debt Consolidation, Free Debt Consolidation Services, Free Debt Consolidation Quotes, Interest Free Debt Consolidation and more. Free Debt Consolidation is affiliated with Online Debt Consolidation Loans.

Debt Consolidation FAQ:

Question: What effect does using one of these “debt consolidation” companies have on your credit rating?
Do they really help? Does your monthly payment really drop substantially? Did it work for you?

Answer: I listen to a radio show every day (Dave Ramsey …look it up, it’s pretty interesting). He says that debt consolidation does some damage to your credit rating, they’re not good plans and sometimes the mess up. He also notes that if you don’t change your behavior, you’re going to get back in debt. He has a process where you pay minimums on every debt you have and then pay everything you can on the smallest. Then once that’s paid off, work on paying off the next.
This is part of a bigger (but very simple) plan he details for free.

Question: Is it still better to pay off the debt myself or continue to work with debt consolidation company?
I have accumulated a lot of credit card debt due to an illness and loss of employment. The amounts I was paying became so large that I couldn’t afford to make the minimum payments so I decided to seek a debt management company. This has been going on for a year, but I don’t seem to be getting anywhere because the interest rates continue to climb on the accounts I’m not currently paying on.

Answer: Work with a company. My husband and I worked with a company in Des Moines, Iowa called Consumer Credit. It was the BEST thing we ever did! July of 2002 we went to them and by October of 2005 we were out of credit card debt! In November of 2005 we were able to move into a new home, bigger than our two bedroom bungalow we lived in for 5 years.

Question: How do debt consolidation places work?

Answer: Debt consolidation agencies are set up to reduce your debts and interests. They help you by negotiating with your creditors on your own terms. Their basic function is to consolidate all your debts or monthly bills in one convenient amount payable every month; and to convince your creditors to accept these terms.

Question: In some debt trouble and I need to know if debt management is better or debt consolidation?

Answer: Debt management would be where a third party comes in and works with you.

For debt consolidation, lets say you owe one credit card x and y. You would combine the two and make the payments.

I don’t know what your debt position is. For some people, debt management is the solution, but it may impact your credit, due to practices that some companies use.

Question: Have you ever heard of debt management (not debt consolidation) and if so, do you think it is beneficial? Why?
I make about $55,000/year and I currently owe approx. $34,000 in credit debt alone. I do not want to file bankruptcy if I don’t have to. I also would like to stay away from consolidation. Today, I was told by a company that they have something called debt management. I’ve never heard of that, but they said unlike debt consolidation where they lower both your interest rate AND balance, all debt management does is get the creditor to lower the interest rate. I would pay a monthly payment to the company and a monthly fee and they would make my payment for me.
At this point, I can only make minimum payments and my balance is going nowhere. Should I give debt management a try?

Answer: Stay away from Debt Management. That is worse than bankruptcy. Getting a debt management service says to all creditors that you cannot manage money.

Best thing to do is get a second job and start paying off and canceling those cards one at a time. Make th minimum payments, but take the smallest debt first and conquer it.

With working a second job, maybe you can also control your spending. Also, make out a budget and live by it.

Question: What is the difference between debt consolidation & credit consolidation?
I am trying to find out if they are the same service, or if they are two separate services, how they work, which is better service to use and why, and a rough estimate of time and cost of these services.

Answer: From a technical standpoint, there is no such thing as credit consolidation. Credit is simply an unmonetized offer of purchasing potential. Simply put, you might have $10,000 as a credit limit, but it won’t hurt you until you use it and can’t pay it back. Debt consolidators look to combine your higher interest debt like credit cards etc, into a single lower interest payment. If you’re deep in hoc, this can save you hundreds per month. Make sure you’re dealing with someone reputable before you sign anything. Your state’s Better Business Bureau is a good place to start. Some states have credit counseling services available as well.

Question: What is the difference between getting the equity of your home and debt consolidation?

Answer: Debt consolidation is when you get one large loan to cover all your smaller debts. It can be any loan and should be when you can get a better interest rate or to spread your debt over more years.
A home equity loan is a mortgage where you pull cash out. That cash can be used any way you want. Invest or pay off the highest interest debts. You can get them up to 30 years so paying off a 2 year car payment with a 30 year mortgage reduces your monthly payment but you will be paying 30 more years on a car you may not have more than a few years.
The home equity loan means when you sell your house you will get less at closing and may not be able to afford to sell at all or will lose your home instead of having the car repo’d.
Besides the danger of losing your home you are in danger of running the debt back up. So if you refinanced your 2 year car loan to a 30 year mortgage you might go buy a different car before you paid off the current one and will have a double debt.

Question: What’s your input on debt consolidation?
My husband seems to let his debt really get him down at times. I sometimes find him staring off in a days, and I know that’s what’s on his mind. I know he has student loans, credit card payments, and still paying on his truck, & other misc. bills. What’s the advantages and/or disadvantages of contacting a debt consolidation company. How if at all can that help our situation?

Answer: Consolidation simply moves the debt around. Within a year, most people (over 90%) end up worse off after consolidation.

Look for a local source that teaches credit management and budgeting. Churches, community groups & Credit Unions are good sources.The classes could be free or cost up to $100. NO MORE THAN $100. Some people charge $500 or more and are of questionable value.

Focus on reducing spending, and paying off the smallest debt first, then the next, etc.

This entry was posted on Tuesday, June 9th, 2009 at 3:43 am and is filed under Credit, Credit Card, Debt, business. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.