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What Are Your Debt Relief Options?

Consumers looking to get out of debt have several options. In fact, the wide range of services can be overwhelming if you’re not sure what you need. And some products and services that claim to relieve debt can cause additional harm to your credit and move you further away from your goals. To help clear up the confusion, here’s an overview of debt relief options.     young black couple reviewing their debt relief options on a laptop

Debt Settlement

Debt settlement is a service offered by for-profit companies that allows consumers to pay back only a portion of what they owe to creditors. That might sound like an appealing prospect. However, a lot happens before you reach the point that creditors will agree to accept only a portion of what you owe. For example, the debt settlement company will likely tell you to stop making payments and instead deposit those funds into a trust account. The balance in this account is what they will eventually use to pay your creditors after they negotiate a settlement amount. In the meantime, you’ve racked up several months of delinquent payments, which can negatively affect your credit for years to come.

You’ll want to think very carefully and find out all the details of a debt settlement program before agreeing to this debt relief option.

Debt Consolidation

If you’re juggling multiple credit card payments every month, a debt consolidation loan allows you to pay off all those cards and make one monthly loan payment. In some cases, you might even save on interest if you’re able to find a loan with a great rate. But here’s the thing. If you’re already struggling with payments or your credit isn’t in great shape, it’s going to be challenging (if not impossible) to acquire a consolidation loan at a reasonable rate. And you’ll need the discipline to not go back to charging on those cards once you’ve paid them off. Otherwise, you’re just compounding your debt and making things worse.

If you can find a loan with a reasonable rate, pay off your cards and not continue charging, it’s worth considering a debt consolidation loan. If not, you’ll want to investigate other options.

Debt Management

Offered by nonprofit credit counseling agencies, debt management plans offer many of the same benefits as debt settlement and debt consolidation, without the potential risks. Plus, there’s no minimum credit score required to be on a debt management plan. This means it’s an excellent solution for those focused on rebuilding their credit. The process starts with a free, confidential credit counseling session to determine your best option. If a debt management plan is a good fit for paying off your credit card debt, benefits include:

  • One convenient monthly payment
  • Reduced interest rates
  • Waived late and over-limit fees
  • An end to creditor calls and collection efforts
  • Accounts paid in full in five years or less (often much less)


Personal bankruptcy can be the path to a fresh start for those facing significant financial hardship. But it’s not a decision or process to take lightly. Declaring bankruptcy can have long-lasting effects on your credit and make it difficult to accomplish future financial goals. Before making any decisions about bankruptcy, you’ll want to talk with an attorney who specializes in it.

If you end up deciding bankruptcy is right for you, Take Charge America offers the court-required pre- and post-bankruptcy courses, which are available online.

Credit Repair

Although technically not “debt relief,” credit repair often comes up in discussions of these issues. Another service offered by for-profit entities, credit repair companies will claim that they can clean up your credit and improve your credit score by having negative entries on your credit report removed. While this is true to an extent, the results of credit repair may not be permanent.

The credit repair process involves the company reviewing your credit reports and disputing all negative entries. During the dispute process, these entries fall off your report and may result in a higher credit score. But unless those items are removed permanently, that bump will be temporary. Plus, there’s nothing credit repair companies do that you can’t do yourself if you have the time and patience.

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