Debt Relief: Compare Your Top Debt Relief Options

Debt Relief
  • Understand that there is no one-sized-fits-all debt solution.
  • Review each available debt solution, so you find the right one.

Tips to Learn About and Compare the Top 6 Debt Relief Solutions. (With Video)

Does your debt make you want to scream? You are not alone, so check out your debt relief options.

Americans now carry more than $850 billion in credit card debt; this is a staggering number that impacts millions of American's lives. Debt is a national problem, but also an individual one, too. We may aim to pay off our credit card debt in full each month, but too many of us don’t succeed. Rising costs of living, stagnant incomes, unexpected life events, and undisciplined spending are common factors that lead to growing numbers of Americans struggling to get out of debt. Factor in the high interest rates that creditors are allowed to charge, and finding a way to manage your debt effectively can be a very difficult task.

An important first step to achieving debt relief is to look at the different ways you can solve your debt problem, whether working on your own or with a professional debt relief firm.  One place to start is to assess who you owe, how much you owe, and the lifetime cost calculations of paying off that debt.  You can start with this handy debt consolidation calculator tool.

Quick tip #1: Get a no-cost, no obligation analysis of your debt options from a pre-screened debt relief provider.

Overview of Debt Relief Options

It is challenging to compare each debt relief option side-by-side, since each solution is unique. Some debt relief options require taking out a loan, some require home ownership, and some are very aggressive and designed only for consumers with serious financial hardship. compares the different debt relief options and put everything on the table, so that you have the information you need to make the best decision for your own needs. If you do your homework, then you can find the right debt relief solution for your unique financial situation.


Your Debt Relief Options Explained: Debt Consolidation, Consumer Credit Card Counseling and More

Mortgage Refinance

You may be able to consolidate your debts with a home equity loan, mortgage refinance or other debt consolidation loans. If you are confident that you will be able to make the payments without building more credit card debt, debt consolidation refinance loans can be an excellent path to reducing your payments and lower the total cost of paying off your debts. To qualify for a mortgage refinance loan, a homeowner usually must have excellent credit and significant equity accumulated in the home. You can learn about refinancing at or even apply with one of’s approved lenders.

Minimum Credit Card Payments

Making the minimum monthly payments on your credit cards is a dangerous financial strategy. It may like you have no choice but to push a growing problem off to another month, especially if you are struggling to make even your required minimum payment. However, if you have high interest rates or high credit card balances that have become a problem, it’s time to figure out how to get off the debt treadmill.

We recommend consumers pay off their debts in full each and every month, especially credit card and high interest revolving debt. If you cannot manage to do that, make sure that you are aware of the true lifetime cost of that debt and what all of your debt payoff options are, and do not just blindly stay on the treadmill of making minimum payments.

Credit Counseling

Credit counseling is a debt relief program that starts with a detailed financial review. If your debt problems are serious and best resolved with outside help, your credit counselor will suggest that you enroll in a debt management plan (DMP). In a DMP, the credit counseling program will obtain interest rate concessions from your creditors. Lower interest rates are the primary benefits of a credit counseling program. Credit counseling may also lower your lower monthly debt payment, but usually not significantly.

A credit counseling debt management plan is a very common type of debt consolidation program. In it, you make one payment directly to the credit counseling agency. The program then distributes that payment to your different creditors. If a reduction in high interest rates is not going to solve your debt problems, credit counseling is not likely the best debt relief option. Credit counseling is like aspirin for a mildly sick patient, where a little help and medicine solves a real pain or financial problem.

Paying Back 100%, Plus Interest

It is important to understand that in a credit counseling program, you are still repaying 100% of your debts, even though you are doing so with slightly lower monthly payments. On average, most credit counseling programs take around five years. While most credit counseling programs do not impact your FICO score, being enrolled in a credit counseling debt management plan does show up on your credit report, and, unfortunately, many lenders look at enrollment in credit counseling akin to filing for Chapter 13 bankruptcy — or using a third-party to re-organize your debts. You can learn more about this debt solution at the section devoted to credit counseling.

Debt Settlement

Debt settlement services offer to negotiate and settle your debts for less than you owe, many times reducing debts by as much as half, before provider fees. Debt settlement is an option for people who cannot afford their monthly payments, and who are not worried if their credit rating will be negatively impacted during the program. It is important to be aware that you are not making monthly payments and staying current on your debts while enrolled in a debt settlement program, so be aware of the credit impact and the potential collection harassment from your creditors. Debt settlement is also a very aggressive form of debt consolidation, and it is akin to chemotherapy for a seriously ill patient — it will hurt, but will hopefully kill the cancer and get you financially stable and healthy again quickly.

Unlike other forms of debt consolidation, debt settlement is based on the future resolution of your accounts, which means that results vary significantly and it is very important to work with a qualified and accredited provider.

Bankruptcy — Chapter 7 and Chapter 13

Bankruptcy should be your last choice for debt relief, because it will severely damage your credit, remaining on your credit report for 7 to 10 years. Also, depending on which type of bankruptcy you file, you could be forced to give up some of your assets or assigned a long-term payment plan. Congress changed the bankruptcy law in 2005, making it much harder to qualify for a Chapter 7 bankruptcy, forcing many people to file for a Chapter 13 bankruptcy, which is really a repayment plan.

Quick Debt Relief Options Evaluation Decision Tree

Here are four fast tips for your own quick Debt Relief Evaluation:

  1. If you have perfect credit and have equity in your home — consider a mortgage refinance.
  2. If you can afford a healthy monthly payment (about 3% of your total debt each month), you want to protect yourself from collection, and do not want to go delinquent — consider Credit Counseling.
  3. If you want the lowest monthly payment and want to get debt free for a low cost and short amount of time, and you are willing to deal with adverse credit impacts and collections — then evaluate Debt Settlement.
  4. If you cannot afford anything in a monthly payment (less than 1.5% of your total debt each month) — consider Bankruptcy, to see if Chapter 7 might be right for you. makes it easy for you to apply for debt relief with pre-screened debt resolution providers.

Ways to Manage Debt on Your Own

If you have more credit card debt than feels comfortable, but it has not reached the point where it is a serious problem, here is some quick and simple advice on how to manage your own self-directed credit card pay-off strategy:

  1. Avoid paying minimum payments each month, if possible. If you can pay more than the minimum payment, you will save hundreds or thousands in interest expense. Credit card interest rates can go as high as 29%-39%! The larger your monthly payment, the faster you will pay off the debt and the less interest you will pay. For example, take a credit card debt of $10,000 with a 22% interest rate. If you continued to only make the minimum payments (4% of the monthly balance), it will cost you $18,216 and take 14 years to become debt free, largely because the minimum payment drops each month as you pay down your debt.
  2. Paying a constant amount each month could save you thousands and will clear out your debt in far less time than paying the minimum amount. For the same scenario above ($10,000 debt and 22% interest rate), a constant payment of $400 per month would cost only $13,094, taking you 3 years to become debt free.

Snowball or Avalanche

If you carry balances on multiple credit cards and can afford more than the minimum payment, you should consider the following strategies. To be effective, both strategies require you to continue paying the same monthly amount towards your debt until all debts have been paid off. Once a single credit card has been paid off is not the time to reduce how much you should pay towards your total debt. Maintaining the same monthly amount (or even increasing the pay-down amount) will help you get out of debt faster and at a reduced cost.

  1. Avalanche Pay Off — The avalanche method involves paying off your credit cards in the order of the highest interest rates. Once you have decided how much you can afford each month, allocate enough money to only pay off the minimum payment on each credit card. Then apply all the remaining funds to paying off the card with the highest interest rate. Once the first credit card has been paid off, apply every dollar you were using to pay off the highest-interest card and add it to what you were already sending to the second highest-interest credit card. Keep following this strategy and continuing paying the same amount each month towards your debt until all debts have been cleared. Using the avalanche method can result in greater savings by paying less interest in the long run.
  2. Snowball Pay Off — The snowball method involves paying off the lowest debt amount first. Like the avalanche method, budget enough money to pay off the minimum payment on all cards. Then apply any remaining funds towards paying off the credit card with the lowest balance. Once you have paid off the first credit card, continue paying the same monthly amount you started with. Follow the same strategy as the first credit card: Pay only the minimum payments on all other cards while using all the remaining funds to pay off your second lowest debt. Although the snowball method may be more costly than the avalanche method, seeing even a small debt eliminated often helps motivate people to stick to the discipline of paying down debts.

You are armed with the right tips and solutions to start your journey to debt freedom. Get on the right path and stay committed to getting rid of that nasty credit card debt, so you can build a bright, debt-free financial future. If you want to see a very innovative side-by-side comparison of the various solutions to getting out of debt, including a chart comparing payments, cost, time and rates of success for the different solutions, then read the Debt Options Whitepaper.

Here are simple and quick tables to evaluate debt relief options:

Estimated Total Cost to Resolve $20k in Credit Card Debt
Option Total Cost Monthly Payment
(% of debt)
Monthly Payment Annual Fees
Mortgage Refinance $40,000 0.5-1.0% $100-$200 4.0-7.0%
Credit Card Pymts. $63,000 3.0-4.0% $600-$800 19.9-29.9%
Credit Counseling $30,000 2.0-3.0% $400-$600 12.0-14.0%
Debt Settlement $13,000 1.5-2.0% $300-$400 5.0-7.0%
Ch. 13 Bankruptcy $14,000 N/A Varies $2,000
Ch. 7 Bankruptcy $1,500 N/A N/A $1,500

Option Typical Length Completion Rate
Mortgage Refinance 30 yrs N/A
Credit Card Pymts. 10-30 yrs N/A
Credit Counseling 5 yrs 21-26%
Debt Settlement 3-4 yrs 40-45%
Ch. 13 Bankruptcy 5 yrs 30-35%
Ch. 7 Bankruptcy 6 mos N/A

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Comments (30)

Jillian S.
Salisbury, NC  |  March 25, 2014
Hello, I don't quite know how to ask this. I have a $7000 loan personal loan from a bank, I got behind and recently received a court summons, I actually got significantly behind on my payments, but was able to catch up after the court summons (naturally). I have been speaking with another bank about Debt Consolidation, in which they will immediately send a check to the original creditor. Is this allowed? I am able to get debt consolidation so long as I have a co-signer, but I feel like I am cheating or something. Does that make sense?
March 25, 2014
There is nothing improper about paying off your old loan with a new loan. Call your current lender to get an exact payoff amount, so the new loan will pay only what you owe. Make sure that there is no pre-payment penalty for the current loan. I doubt there is, but check to make sure.
Nick R.
Northglenn, CO  |  April 24, 2013
I owe no more than 1800$ and the collection agency is trying to collect $6200. What can I do?
April 28, 2013
I want to start my answer to your question by quoting the California Office of the Attorney General. What they say applies directly to California consumers, however, the principles outlined are a good starting place for figuring out what you need to do.

The California AG's Web site says, "A collection agency can add interest to your bill, however, the terms and rates depend on the circumstances of your particular account. The collection of any amount (including any interest, fee, charge, or expense incidental to the principal obligation) must be expressly authorized by the agreement creating the debt or as permitted by law. An attorney should be able to tell you how much the agency can legally charge you. You are also entitled to an explanation from the collection agency as to how much they are charging you and why. You should ask them by letter to explain to you in writing."

Therefore, you should:
  1. Review the original agreement you made with the creditor
  2. Contact your state's Office of the Attorney General Consumer Affairs Office
  3. Write the collection agency for an explanation of how they reached the current balance
  4. Consult with an attorney in your state, if you don't receive a satisfactory explanation.
Dale W.
Alexandria, VA  |  November 23, 2012
I have about $60,000 in private student loan debt. All of which has been turned over to various collections agencies. $15,000 in Federal Student Loans, which i just started making normal payments on. Lastly $7,000 in a credit card debt that I received a court summons in CA but I was moving out of state the next day and was not able to take care of it. Should I consider credit counseling or debt settlement? My goal is to buy a home in the next 10 years, and I just want my credit better.
November 26, 2012
First, you are wise to get yourself current on your federal student loans. Make maintaining a current status on these loans a high priority.

Second, consult with a California lawyer who has consumer law experience immediately. Under California civil procedure rules, because you were present in the state the moment you received the summons, it is likely a California court will consider it has personal jurisdiction over you, regardless of your leaving the state and residing elsewhere the day after your being served. A California lawyer will help you write a answer to the summons and can represent you in court. He or she can also help you negotiate a settlement on this delinquent account.

Third, regarding the $60,000 in delinquent private student loan debt, we are starting to see debt settlement companies accept private student loans under limited circumstances. Consult with a debt settlement partner to learn if debt settlement is an option for you. Regarding credit counselling, that is unlikely to be an option for private student loan debt, given that credit counselling debt management plans have a maximum length of 5 years, and repay 100% of the balance due.

Finally, read the article Getting a Mortgage Loan with Bad Credit to learn what steps you can take now to qualify for a mortgage in the future.
Jason J.
Whitehall, OH  |  May 22, 2012
I have about $6,000 in unsecured debt and collections, but dont know how to take care of it, or how to go about and find if i have any other collections that i dont know about. How do i go about finding these and paying them off without going futher into debt.
May 22, 2012
Start with a no-cost credit report at Review your report and see what debts are listed and who is collecting on them. There should be contact information in the back of the report for your creditors.

Consider how long it has been since you paid on your accounts and check to see if any of the debts may have passed the statute of limitations. If the SOL has not passed, you can contact your creditors to try and work out a payment or negotiate a settlement. Be aware that when you contact your creditors and shine light on yourself, it is possible that one or more may move aggressively to collect on the debt.
Brittany B.
Indianapolis, IN  |  October 11, 2011
I have over $140,000 in student loan debt and a car loan included in there. I will have my car paid off this year but struggling on how to go about making my loans more affordable. Most are private loans so I cannot just consolidate them but my payments when they all kick in is going to be like 800 to 1000 a month and cannot afford that right now, im still in school and a single mom and am lost because of course filing ch. 7 or 13 is not an option on loans. And my credit isn't too hot. What advice do you have?
October 12, 2011
It is not accurate that you can't consolidate private student loan debt. It can be difficult to qualify for the loan consolidation, but it is worth looking into.

You are also incorrect about bankruptcy. Even if you can't discharge the debt in a Chapter 7 bankruptcy, a Chapter 13 could allow you to repay the loan with a lower monthly payment. In a Chapter 13 bankruptcy, the court will decide how much you can afford to pay each month.

Once you finish school and the loans come due, start by speaking to your lenders, to see what you can work out with them, when you disclose what you earn. Also look into both the private student loan consolidation and bankruptcy, so you know whether either of those solutions can help you.
Dewayne G.
February 22, 2012
Check to see if you have any federal loans, like Staffords. Even if they came through a private lender, you can consolidate them which they offer a repayment schedule that is meant to help you take control of your debt.
Quick Q.
Darragh, PA  |  October 07, 2011
You may make additional issues, as well as ones with the tax authorities, if you are incorrectly signifying that your wife is receiving income for work that you do.
Dan S.
Siloam Springs, AR  |  August 23, 2011
I am under a credit card payroll garnishment order - in my name only - at a part-time job. If I quit and have a contract labor income at another place and if that employer makes the check payable to my sales company under my wifes ss#, what kind of problem do you see? Thanks - Dan
August 23, 2011
You may create further issues, including ones with the tax authorities, if you are falsely representing that your wife is receiving income for work that you do. Were I in your shoes, I would discuss this with an attorney, before trying to evade a garnishment as you described.
John K.
Chicago, IL  |  August 16, 2011
Can you guys please do these debt relief tools for the US Government? Seriously, don't we need some bankruptcy alternative debt solution for Federal debt pretty darn soon?! Maybe all the countries should consolidate their debts.
August 17, 2011
It is interesting to read your comment, just two days after wrote that consumers can learn from the ways that different countries are dealing with their debt crises how best to deal with their own debt problems.

One advantage consumers have is an individual is a small ship that can turn quickly, after the captain makes a decision. Governments, on the other hand, have many voices trying to give orders and each one may have different goals.
Walter R.
July 13, 2011
What do you think is the best debt relief option for me: I owe a lot, about $100,000 or more in debt and cannot afford my payments. I looked into bankruptcy and there is no way that i can qualify for a chapter 7 bankruptcy. Debt advice is greatly valued and appreciated Mr. Bill.
July 14, 2011
I lack enough information about your situation to give you a specific recommendation.
  1. If your main problem in paying down your substantial debt is high interest rates, then look into a credit counseling program.
  2. If you need a principal reduction to pay off your debts, look into debt settlement.
  3. If neither of these options seem right for you and you cannot sustain your payments, you may have to opt for a Chapter 13 bankruptcy.

To help you choose which option is best for you, use the free Debt Coach tool.

Janis I.
February 22, 2011
I was just turned down for a debt consolidation loan. I tried to refinance my home to consolidate debt, but there is not enough equity. I tried to get an unsecured loan, but the interest rates were as high as my credit cards, so that wouldn't help me at all. I am considering the other options you listed. I am not behind on my payments. If I am making all of my current payments, but am not paying down my debt and feel like I am going to be stuck paying interest (which they hiked to 21% last year, even though I never missed a payment) forever. What do you suggest? Thanks!!!
February 22, 2011
I commend you for looking at your various options for getting out of debt. As a debt consolidation loan is not an option, I suggest that you look at two specific options.
  1. A Consumer Credit Counseling Service. A credit counseling program will obtain lower interest rates for you, speeding up the time it takes for you to get out of debt. If you are paying high interest now, a credit counseling program would be a very effective way to proceed. A credit counselor will be able to review your debt load, let you know what rates it can obtain from your creditors, and tell you how long it will take you to pay off all the debts you enroll in the program. Your credit score is not affected by the credit counseling program, though during the time you are enrolled in the credit counseling program you may be turned down for new lines of credit, as prospective creditors will be able to see that you are using the services of a third party to help you manage your debt.
  2. Consider debt settlement. In a debt settlement program, the firm you hire negotiates reduced dollar payoffs from your various creditors. Debt are often settled for 40-50% of what you owe. Debt settlement will get you out of debt in the shortest time, while avoiding bankruptcy, compared to other options. Reputable debt settlement firms only take on clients who have a financial hardship. You will have to speak with someone at a debt settlement firm, to see if that option will work for you. Make sure that you hire only a debt settlement firm that is complying with new Federal Trade Commission rules that went into effect in late 2010. These rules were created to protect the consumer. For instance, anyone now enrolling in a debt settlement program is not required to pay a service fee to the settlement firm until his or her account has been settled. This makes settlement an even more attractive option for the consumer.
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