Lower Interest Loans

Free Debt Consolidation Services
(Guidelines For Choosing The Best Service)

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Many people find themselves in difficult financial situations for many reasons. Free debt consolidation loan services, (also known as credit counseling services) can negotiate with creditors to get better repayment arrangements on your existing debts. They can arrange for monthly payments to be lowered and interest charges are reduced.

Once you enroll in a debt consolidation program, you don't have to deal with being harassed by your creditors anymore. You send one monthly payment to the credit counseling company and they pay creditors on your behalf.

Creditors are willing to co-operate with debt consolidation services because it means that they can at least salvage some of the money that they are owed by a client who may otherwise have to file for bankruptcy. Unsecured debts like credit cards, lines of credit, personal loans, medical bills, business loans, and past due utilities all usually qualify for debt consolidation programs.

Your monthly payment is figured out according to the lowest amount your creditors will accept. The company you sign up with distributes the amount of your "fixed" monthly consolidated payment to your creditors. Many creditors reduce or even stop your interest fees as long as the monthly minimum payment is met. It depends on the individual creditor's policy, but often interest rates can be reduced from up to 24% to as low as 0%.

Usually once you enter an agreement with a debt consolidation service you must close your credit card accounts and other debts. The idea is to help you avoid continuing in the same pattern that caused the problems in the first place.

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While free debt consolidation services can provide a valuable service, you need to be careful about the company you choose. Here are some guidelines to help you choose wisely:

· Be sure to ask questions about repayment plans. For example, what happens if the repayment plan is more than you can afford?

· Find out up front what the start-up and monthly maintenance fees will be and get it in writing.

· Carefully read through any written agreements. Be sure they clearly state what services are to be performed; the payment terms, how long it may take to pay off the debts; any guarantees offered. The organization's business name and address should be clearly stated.

· Check with the Better Business Bureau to find out if there are any complaints against the company you are considering, and if there are complaints were they resolved.

· Make sure to use a non-profit organization. Non-profit status doesn't necessarily mean that the company will do a good job, but it's a good indication of a stable organization.

· These services cannot erase your credit history. So if a company claims to be able to do so, avoid them. Under the Fair Credit Reporting Act, accurate information about your accounts can stay on your credit report for up to seven years.

· Find out what other sources of funding they receive, who regulates and audits their operation, if they are certified by the International Standard of Operations (ISO compliant), if their counselors are certified and by which association, and if there is a formal written agreement.

· Find out if you will continue to receive statements from your creditors indicating what interest rates you are charged and how your debt is being reduced each month.

· Be sure that your creditors are willing to work with the company you choose, and then follow up with those creditors on a regular basis to make sure your debt is being paid off.

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