Free Debt Consolidation – Is There Really Such Option?

As one scans the current economic landscape, attempting to sort through the frauds, the false promises, and the minutia, in search real solutions to the financial hardships that have become increasingly common, one cannot help but wonder if free debt consolidation is a real option.

The answer to this is, of course, you get what you pay for – not-for-profit companies charge healthy fees, and there is a real cost to most credit counseling programs. The single exception to this, however, is the government programs that are available to those who qualify. These are not free, of course, as they are funded by tax dollars, but one pays for them whether one benefits directly or not, so, at least in one sense, they are free.

Natalia Osorio Editor of the ”Best Debt Consolidation Services” website — — pointed out;

”…Government debt consolidation programs are not open to anyone and are usually targeted at a specific group of people; the mortgage modification laws are designed to help homeowners and stimulate the housing market, while the Higher Education Act is designed to aid students in paying for college and graduate school. Given the plethora of these programs, most individuals, either through their own efforts or with the assistance of a third-party service provider, can find one or more programs that can offer some assistance at this time of so many challenges. It is important to remember that while these programs are designed to provide help to those in need, as with any federally mandated program, the requirements are very specific and must be precisely met; the spirit of the law will never trump the letter of the law in qualifying…”

Under most of these programs, the Direct Loan Consolidation Program and Federal Family Education Loan Program for example, the borrower applies to the government to participate in the program. Once the criteria of participation have been met, the government pays off the multiple existing loans and issues the borrower a single new loan. The original loans may have had different payment terms, from interest rate to duration, and may have even been written by multiple lenders. The new loan, however, will be a single loan requiring a single monthly payment.

”…The idea is that the borrower will be more able to service a single loan than multiple loans as he or she learns to be a more responsible borrower. The new loan will usually allow for a longer repayment period and be issued at a lower net interest rate. There, while these programs are not really free, they are there to help and should be identified and capitalized upon…” N. Osorio added.

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