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Compare and Evaluate Your Debt Relief Options

Compare and Evaluate Your Debt Relief Options

Get rid of your debt faster with debt relief

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Or speak to a debt consultant  844-731-0836

Daniel Cohen
UpdatedMay 20, 2024
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    8 min read
Key Takeaways:
  • There are debt relief options that can help you become debt free.
  • Look at your do-it-yourself options first.
  • Consider all your debt relief options before choosing one, then work hard so you succeed.

Which Debt Relief Option is Right for You?

If you are struggling with debt, understanding the different debt relief options available is a smart step. Some debt relief options you can do yourself and others are offered by professional firms that can help you.

If you are spending more than you are earning, living on credit, you probably know that you can’t keep that up forever. Over time, your credit card balances and minimum payments will grow. Eventually, you will max out your cards, using all your available credit. Higher balances mean larger required payments, too.

Maxing out your cards also harms your credit rating, narrowing your debt relief options. Higher minimum payments increase the risk of not making your required payment on time. If you are one day late with your payment, your creditor can raise your interest rate to a penalty rate, which can be 30% or higher.

It is easy to be trapped, in this situation. The interest is so costly that it is hard to pay down the principal. If one late payment starts a spiral out of control, it is easy to end up in collections or facing lawsuits, and dealing with all the stress that comes with financial problems.

If you’ve established this pattern, it’s time to stop, and reclaim your life by finding the appropriate debt relief option.

Get a Free Debt Relief Consultation

You can speak with a Certified Debt Consultant at 800-610-4560. It takes about ten minutes to go over your situation and discuss your options. You can also use this link to start a consultation online.

DIY Debt Relief Options

If you have the discipline and the know-how, you can create and complete your own program. The two most common do-it-yourself debt options are:

Snowball and Avalanche

The “snowball” method works by making the minimum payments on all of your accounts aside from the one with the smallest balance. On just that one account, make the highest payment you can afford in an effort to pay it off as quickly as possible. Once you pay off that account, you take the entire amount you were paying each month on the paid off account and add that amount to what you send to the account with the next smallest balance, repeating the process until all your debts are paid off.

The “avalanche” method works the same way, but targets the account with the highest interest instead of the smallest balance. Avalanche will cost you less, though depending on the mix of interest rates and the balances on your accounts, the difference may not be great. The advocates of snowball stress the importance of the psychological reinforcement you get when you pay off the first account. This is Dave Ramsey’s recommendation. His experience is that snowball will lead to fewer dropouts.

Not everyone is the same and how you look at decisons and follow through on them is a key part to finding the right debt relief option. What is more important to you? Run the numbers to compare snowball and avalanche. Is the difference significant? If the savings are enough to matter, maybe you can use it to motivate yourself. If thinking about running the numbers is enough to give you a headache, then stick with the snowball method.

Balance Transfer

If your credit is still good enough for approval, open an account with a zero-interest introductory rate. Many cards offer this rate for up to 18 months. Transfer your existing balances to the new account (there’s usually a fee), and pay as much as you possibly can during the introductory period.

If you can’t resist the lure of available credit once you’ve transferred your balances, close your accounts. Or skip this method and get professional help with your debts.

Home Equity

Homeowners with equity may have very cheap financing at their disposal. Even with interest rates higher than they were the past number of years, the rate on home equity loans are much lower interest rates than credit cards or personal loans. Using equity in your home also can lower your monthly payments significantly, because your repayment is extended to 15 years or more.

There are a few pitfalls:

  • Consolidation does not wipe out your debts. Remember, you still owe the money.
  • Stretching out repayment can increase your interest charges over the life of the loan, even at a lower rate. If a lower payment is your primary goal, then it may be a good solution, but be aware of the downside.
  • Running up account balances after zeroing them with a home equity loan will leave you with more debt than before, worse off because you gave yourself the leeway to run up more debt. Some experts estimate that 85 percent of consumers who try to consolidate with home equity fail for that reason.

Personal Loans

One reason people get trapped in credit card debt is that they can’t resist the temptation of available credit. Personal loans can be useful because they are installment loans, usually with a fixed rate and monthly payment. You make monthly payments until the balance is zero, and the debt is gone. You can usually pay off early without any penalty, if you have the means, and save yourself money by paying back less interest.

Personal loan interest rates are usually higher than home equity rates, but lower than credit card rates. Personal loans have shorter terms than home equity financing, so if you pay off your cards with a personal loan and then pay off the personal loan, you can get debt-free in a reasonable time-frame – from two to five years. The higher your credit score, the better interest rate you will get, so this is an attractive option if you have strong credit.

As with other debt relief option, this only works if you don’t take on more credit card debt. Close your accounts if you need to.

Today's Personal Loan Rates

You can see the rates for personal loans available in your area by our personal loan rate table on this page.

Professional Debt Relief Options

The DIY approach has a high failure rate, because it doesn’t address the habits that get people into trouble in the first place. If you have big money problems, consider bringing in a heavy hitter.

Credit Counseling

Credit counseling agencies offer confidential assessments of your debt problems. They help you create and stick to a budget, and hold you accountable for your debt repayment. The long-term benefits of credit counseling include financial literacy and the establishment of better habits.

Debt Management Plans

In addition to advice and education, credit counseling organizations offer debt management plans, or DMPs. DMPs consolidate your unsecured debts so that you make one payment each month, and your plan doles it out to your creditors. In many cases, your plan administrator can get your creditors to waive penalties and fees, reduce your interest rate and lower your monthly payment. Typically, your debts are repaid through your DMP in three to five years. You’re usually required to close your credit cards and refrain from seeking new credit until your plan is completed.

Debt Settlement

Debt settlement is worth considering if you have $10,000 debt in more, are struggling to make your monthly payment or already behind. Debt settlement is a debt relief option if you are looking for a way to avoid bankruptcy.

In a debt settlement program, you make a monthly payment that is held in a bank account under your control. You choose to put money in your account instead of paying your creditors directly. While the money is building up in your account, the debt settlement firm negotiates with your creditors to obtain an agreement for you to pay off the debt for less than you owe. When a settlement is negotiated, the money is paid from your account funds after you review and authorize the settlement.

The main benefits of debt settlement are:

  • The lowest cost for getting out of debt outside of Chapter 7 bankruptcy
  • A lower monthly payment than other debt relief options
  • Shorter time to get out of debt than other options

The main drawbacks of debt settlement are:

  • Your credit is harmed when you stop paying your creditors directly.
  • Collection calls from your creditors.
  • Possible legal action against you.
  • Results vary.
  • Total costs quoted by a settlement firm are an estimate. Avoid a firm if it says that your settlement program is like a personal or car loan that is done and over if you make the agreed on number of payments.

It is important to choose an experienced, reputable debt settlement firm. They have well-established contacts with creditors, can bundle settlements from various clients together to get a better deal. They disclose the pros and cons of debt settlement and will guide you through ways to minimize the negative effects of the program. Look for reviews of any debt online, such as at the BBB or TrustPilot.


For any debt relief option to succeed you need to address what caused you to get into debt in the first place. Learn from your past and avoid repeating the same behavior.

Whether you get out of debt with a professional debt relief option or a do-it-yourself strategy require you to stick to the plan you put in place. If you stop partway through, you won't solve the problem. This requires discipline to achieve. You have to control your spending and make your plan's regular monthly payment.

Because any debt relief option other than bankruptcy Chapter 7 takes years to complete, sticking with the program shows a discipline and commitment to your financial health your efforts to pay off your debt rs. If bad spending habits got you into trouble in the first place, replacing bad habits with good ones can get and keep you out of trouble in the future.

Did you know?

Mortgages, credit cards, student loans, personal loans, and auto loans are common types of debts. According to the NY Federal Reserve total household debt as of Q4 2023 was $17.503 trillion. Housing debt totaled $12.612 trillion and non-housing debt was $4.891 trillion.

According to data gathered by from a sample of credit reports, about 26% of people in the US have some kind of debt in collections. The median debt in collections is $1,739. Student loans and auto loans are common types of debt. Of people holding student debt, approximately 8% had student loans in collections. The national Auto/Retail debt delinquency rate was 4%.

The amount of debt and debt in collections vary by state. For example, in Hawaii, 16% have any kind of debt in collections and the median debt in collections is $1866. Medical debt is common and 5% have that in collections. The median medical debt in collections is $339.

While many households can comfortably pay off their debt, it is clear that many people are struggling with debt. Make sure that you analyze your situation and find the best debt payoff solutions to match your situation.



VVivian Youhanna, May, 2019

Can I consolidate debts that are in collection agencies already?

DDaniel Cohen, May, 2019

Vivian, there are consolidation options for debts already in collections, although it depends how long the debts have been in collections. 

Here are two options for you to review:

1. Look into a Consumer Credit Counseling Service's Debt Management Program. You make one monthly payment to the program and the firm sends payments to your creditor. They can often reduce the interest rate you are currently paying, so you get out of debt faster and at a lower cost, and often acept accounts in collection. Call Consolidated Credit Counseling at (844) 432-0140 to see what they can do for you. 2. A debt settlement program is another option with one monthly payment. However, your payment is not sent to your creditors. It is deposited in a bank account that remains under your control. As the funds grow, they are used to pay the creditors after the settlement company negotiates a reduction in the amount you owe. Call Freedom Debt Relief at (800) 610-4560 to learn about this option.


AAnthony, Nov, 2011
My wife and I have approximately $50,000 in student loan debt at about 5.5% which we are trying to pay off quickly (less than 3 years). Right now, we could cash out refinance our cars at 1.99% and use that money to pay down about half of the $50,000, effectively lowering the interest rate and consolidating some of the student loans. However, I know that student loans have some sort of tax advantage (I'm not sure how much). Does it make sense to refinance the cars? Or is the tax benefit of the student loans significant enough to justify keeping the 5.5% rate?
BBill, Nov, 2011
It is true student loans have tax advantages under certain circumstances.

As the IRS explains in Topic 456, you can claim the deduction if all of the following apply: • You paid interest on a qualified student loan in tax year 2010 • You are legally obligated to pay interest on a qualified student loan • Your filing status is not married filing separately • Your modified adjusted gross income is less than a specified amount which is set annually, and you and your spouse, if filing jointly, cannot be claimed as dependents on someone else's return

According to the calculations I made you will save about $1,401 on nominal interest charges, which would bring more benefits than your tax savings. Before you do the refinance check into what type of closing costs you will have on the loan refinance.

VVictor, Jan, 2011
Thanks for the debt tips. This actually is really helpful.My question is: do you have a recommended company for each solution?
BBill, Jan, 2011
I recommend that you visit the savings center. There, you can get free consultations and debt relief quotes to see what your options are and how much you could save from one of's pre-screened debt providers.
FFrederick, Dec, 2010
This is the best comparison I have ever seen side-by-side of all the debt options. I actually never really knew what the differences between credit counseling, debt management, etc and now I do. Thank you for sharing this. Since i can afford my payments, but don't have a home I think I will look at credit counseling.
AAnonymous, Dec, 2010
That's great Frederick, and thank you for your note. We actually did quite a bit of primary research to get the best data available (much of it is from FTC research and data) to present to consumers, so that they are empowered to make the best decisions about their own debt situation. Good luck and report back on what you choose to ultimately do.