Debt Relief Programs- Find the Right Way to Get out of Debt

Debt Relief Programs- Find the Right Way to Get out of Debt
Daniel CohenJun 22, 2020
Key Takeaways:
  • Review the pros and cons of the most popular debt relief programs.
  • Compare debt relief programs, before you choose one.
  • Commit to a debt relief program with affordable monthly payment.

Find the Right Debt Relief Program for Your Specific Needs

When you are searching for debt relief, it can be hard to figure out which of the many debt relief programs is right for you. There is no one-sized-fits-most debt solution. Each debt relief program has pros and cons. You can have the same financial situation as someone else (the same debt, income, assets, family size, etc.) and yet you could two different programs to pay off your debt- and both of you could be right.

Figure out which program has pros that outweigh the cons for accomplishing your financial goals. Your primary goal may be to get out of debt at the lowest total cost. Maybe finding the debt relief program with the lowest monthly cost is the most important goal, even if it takes longer to get out of debt. Paying off debt could be a high priority, but protecting and improving your credit score may be even more important to you. In that case, understanding the credit impact of each debt relief program is very important. The bottom line is that your individual goals will determine which of the many debt relief programs is right for you.

Prefer to Discuss Your Situation?

If asking questions and getting immediate answers is important to you, call 844-731-0836 to speak with one of our Enrollment Advisers. They have a full suite of debt solution options and are trained to consult with you to help you find the debt relief program that best suits your needs.

Here is a chart designed to help you weigh the pluses and minuses of the various debt relief programs. You will find the type of debt relief program with a list of its pros and cons.

After you look at the pros and cons, use the links in the "Type of Program" column to find more information about any debt relief programs that appeal to you.

Type of ProgramProsCons
Credit CounselingLowers interest ratesPayback is 100% of principal plus some interest
Can lower monthly paymentMonthly payment may not drop enough to offer cash-flow relief
Stops late feesMonthly fees
No collection callsHigh dropout rate
Credit rating impact
Debt SettlementtSignificantly lowers monthly paymentCredit rating impact
Lowest cost to get out debt, while avoiding bankruptcyCollection calls are possible
Speeds up the time to debt freedomCreditors can pursue legal action
Bankruptcy Chapter 7Wipes out debtsDifficult to qualify
Offers a fresh startProcess is public, which may be embarrassing
Prevents levy or garnishmentMay require liquidation of assets
Severe credit impact
Have to answer 'yes' on any job or financial application that asks if you ever filed BK
Bankruptcy Chapter 13Stops collectionsDoesn't erase your debts
Prevents levy or garnishmentSevere credit impact
Monthly payment can be high, offering no payment relief
Public process
Debt Consolidation Loan Personal LoanLower interest rateRequires excellent credit for best rates
Convenience of one monthly paymentDoesn't address the reason debt existed,
May extend the loan termMany borrowers rtake out the loan and run up new credit card debt
May lower monthly payment
Cash-out Refinance to Consolidate DebtInterest rates far lower than unsecured loans, generallyCan increase total costs by extending repayment to 15 or 30 year term
Increase cash-flow with smaller required monthly paymentTurns unsecured debt into secured debt
Low rates for fair credit scores and aboveNeed to have sufficent equity and meet lender's requirements for credit and DTI
You can be 'trapped' in your home, if the home value drops below the mortgage balance
Balance TransferLower interest rateRequires excellent credit
Get out of debt fasterInterest rate skyrockets, if a payment is missed or late
Low rate expires after 'teaser' period
Can't transfer a balance from the same creditor
Requires bigger monthly payment to pay debt off during low interest period

Debt Relief Pros and Cons

Debt Navigator

Use the Bills.com Debt Navigator to compare different debt relief programs. You will receive a recommendation based on your priorities. The Debt Navigator is free and has no impact on your credit.