Debt Consolidation Services: Free vs Paid, Which Are Better?

By: Gibran Selman

Free or paid, debt consolidation services are debt consolidation services, right? Wrong! More often than not people fall into the trap, the reason being incomplete information on the industry and inadequate knowledge on how the industry runs. But before we proceed further into the discussion, we must also take into notice the underlying factors that are compelling people to opt for the free services more than the paid ones, the first among which being the high prices taking toll on the customers.

High debt levels and defaulted payments being the prime reasons behind opting for these free services, there are instances that proved a large number of consolidation services to be nothing but scams; however, the silver line is that honest and reliable companies exist, based on whose goodwill the scammers proliferate. Therefore, instead of finding out which is which, it's always better to keep the free services, unless it's a direct Government undertaking.

A debt consolidation service is the last straw before one applies for bankruptcy; according to the bankruptcy reform bill, debtors hold the right to participate in credit counseling services or programs. The legitimate and free consolidation services thus help to restore a debtor's credit.

Debt consolidation services work to grant the debtor the space of making one monthly payment instead of multiple ones; these services pay off the existing creditors and breaks the amount in equal monthly payable amounts that neither does appear hefty to the debtor nor troublesome to repay. And all that becomes possible because these services charge an interest much, much lower than other lenders. However, debt consolidation services, free or paid, make the customers pay more over the long term; lower payments over a longer period typically mean paying more in amount.

One thing to keep in mind: there are no wine and roses story; while some debt consolidation services provide financial counseling for free, they charge for transforming the words into action. The truly legitimate consolidation services charge nominally for it; in case these charges skyrocket, beware. Additionally, getting in touch with the Better Business Bureau shall offer in-depth information on the company that you are planning to opt for. But always remember, debt consolidation services are the final check posts before filing bankruptcy; if you can survive the stress accumulated from a pile of unpaid bills and growing debts, do so. And if you are sure that it is your last way out, do some preliminary research to separate the fakes from the real ones, else you know where false services may lead you to.

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