Bills Logo

How to Find Effective Debt Relief Solutions

Debt Relief Solutions
Daniel Cohen
UpdatedApr 3, 2024
  • clock icon
    6 min read
Key Takeaways:
  • Debt relief can be a hard pill to swallow.
  • No one choice is right for everyone in every situation.
  • Credit counseling is like aspirin for a mildly sick patient, where a little help and medicine solves a real pain or financial problem.
  • Debt settlement services offer to negotiate and settle your debts for less than you owe.

Looking for debt relief? There are six main forms of debt relief, and choosing the right debt relief solution can be one of the most important financial decisions of your life.

We are here to help you make the right decision that is best for your particular needs. Each of the six choices offers positives and negatives, and no one choice is right for everyone in every situation. Debt relief is a broad term that defines many different types of debt relief solutions, including struggling to pay your loans, credit counseling, debt settlement or debt resolution programs, mortgage refinance loans, and two types of bankruptcy.

Debt Relief

Debt relief can be a hard pill to swallow.

First, let us take a brief look at each choice. Later, we make a side-by-side comparison of each option, including the short- and long-term cost of each. Finally, we show you where to learn more about each option, and next steps you can take.

Six debt relief solutions to consider

Debt Relief OptionDescriptionMetaphorical Comparison
Minimum PaymentsMaking only the minimum monthly payments on credit cards.Like postponing a necessary treatment, only to face a bigger problem later.
Credit CounselingEnrolling in a debt management plan to get lower interest rates and payments.Aspirin for a mildly sick patient: provides relief but doesn't cure the underlying issue.
Debt SettlementNegotiating to settle debts for less than owed, often reducing debts significantly.Chemotherapy for a seriously ill patient: aggressive and painful, but can lead to recovery.
Mortgage RefinanceConsolidating debts with a home equity loan or other debt consolidation loans.A surgical procedure: can provide significant relief if done correctly, but requires the right conditions.
Chapter 7 BankruptcyLiquidation bankruptcy where most debts are discharged, but may require giving up some assets.A major surgery with a long recovery time: drastic measure with long-lasting consequences.
Chapter 13 BankruptcyRepayment plan bankruptcy where you repay some or all of your debts over a 3-5 year period.A long-term treatment plan: requires commitment and discipline, but can lead to a fresh start.

Option 1: Minimum payments

Making the minimum monthly payments on your credit cards can be a dangerous financial strategy. Although it may feel good to push a growing problem off to another month, if you have high interest rates and a credit card debt balance that has grown to become a problem it just might be time for a gut check and to look in the mirror.

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 keep on the treadmill of making minimum payments.

Option 2: Credit counseling

Credit counseling is a program that enrolls you on a debt management plan (DMP), which usually allows you to qualify for concession rates from your creditors. The primary benefits of a credit counseling program are lower interest rates and lower payments.

Credit counseling, or signing up for a debt management plan, is a very common form of debt consolidation which is essentially a way to make one payment directly to the credit counseling agency that then distributes that payment to your creditors. Most times, a credit counseling agency will be able to lower your monthly payments by getting interest rate concessions from your lenders or creditors. Credit counseling is like aspirin for a mildly sick patient, where a little help and medicine solves a real pain or financial problem.

It is important to understand that in a credit counseling program, you are still repaying 100% of your debts but with 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 relief solution at the section devoted to credit counseling.

Get Out Of Debt faster

See where your money’s going, make a smarter debt payoff plan, and get debt-free faster with the free Achieve GOOD™ app.

Learn more

Option 3: 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.

Option 4: 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 to make the payments without building more credit card debt, debt consolidation refinance loans can be an excellent path to reducing your payments, lowering the total cost of your debts, and a refinance mortgage loan can also possibly reduce your taxes. You must be a homeowner to qualify for a mortgage refinance loan, and usually have excellent credit and significant equity accumulated in your home. You can learn more at the refinance portal or even apply with's approved lenders.

Options 5 and 6: Chapter 7 and Chapter 13 Bankruptcy

Bankruptcy should be your last choice in a debt relief solution because it will damage your credit for 7 to 10 years and, 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. There have also been legal changes put in place by Congress that make it more challenging to qualify for a chapter 7 bankruptcy, forcing many people to file for a Chapter 13 bankruptcy which is really a repayment plan.

Summary tables - Comparing debt relief solutions

Here are two simple tables to evaluate your six debt relief solutions:

OptionTotal CostMonthly Payment (% of debt)Monthly PaymentAnnual Fees
Mortgage Refinance$40,0000.5-1.0%$100-$2004.0-7.0%
Credit Card Pymts.$63,0003.0-4.0%$600-$80019.9-29.9%
Credit Counseling$30,0002.0-3.0%$400-$60012.0-14.0%
Debt Settlement$13,0001.5-2.0%$300-$4005.0-7.0%
Ch. 13 Bankruptcy$14,000N/AVaries$2,000
Ch. 7 Bankruptcy$1,500N/AN/A$1,500

Estimated Total Cost to Resolve $20k in Credit Card Debt

OptionTypical LengthCompletion Rate
Mortgage Refinance30 yrsN/A
Credit Card Pymts.10-30 yrsN/A
Credit Counseling5 yrs21-26%
Debt Settlement3-4 yrs40-45%
Ch. 13 Bankruptcy5 yrs30-35%
Ch. 7 Bankruptcy6 mosN/A

Finding professional debt relief help makes it easy for you to apply for debt relief with pre-screened debt relief providers.

Readers often ask which debt relief solutions they should stay away from. See the resource Debt Relief Scams to learn what to avoid, and Debt Relief Programs to learn more about the solutions discussed here.

Dealing with debt

If you are struggling with debt, you are not alone. According to the NY Federal Reserve total household debt as of Quarter Q4 2023 was $17.503 trillion. Student loan debt was $1.601 trillion and credit card debt was $1.129 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 10% had student loans in collections. The national Auto/Retail debt delinquency rate was 4%.

Each state has its rate of delinquency and share of debts in collections. For example, in Maine credit card delinquency rate was 3%, and the median credit card debt was $385.

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.



JJulius, Feb, 2021

I am interested

BBBVA Financials, Dec, 2019

I want to warn people about using the email address in a soliciation to determine if you are being scammed. 

I received the following pitch and you can see that the email references a legiitimate company BBVA, but the email address they want you to use to correspond with them is a Gmail address. Come on! All official  emails from BBVA would end in Never respond to a loan offer from a company that uses Yahoo, Gmail, Hotmail, or any other email aside from an email tied to their business domain.

Here is the scam offer I received, I changed the email address, addiing a space, so it won't show as a link, and took out the last four digits of their phone number.

"GET AN AFFORDABLE LOAN NOW. BBVA brings you loans at 3% interest rate... Available to all categories of persons. We Offer Loans to Private and Commercial bodies on a very low annual interest rate of 3% ,1 to 35 years repayment. We give out loans within the range of $5,000 to $500,000,000. This is to eradicate the growing history of Bad Credit and also to bring stable profit to both our company and our clients. Get your loan today at 3% rate and the approval process is done within 48hrs. Are you losing sleep OR worrying how to get a Legit Loan Lender? Contact: BBVA Financials now via E-mail: customer.bbvafinancials @ Mobile Number: +1 501-**** call or text We offer loan at low interest rate of 3% and, we offer *Personal loans, *Debt consolidation loans, *Venture capital, *Business loans, *Education loans, *Home loans. For More Urgent Information Get Back To Us Immediately. Mobile Number: +1 501-429-**** call or text Contact us at Via: customer.bbvafinancials @

DDaniel Cohen, Dec, 2019

Great point!! Thanks for sharing.

IIrene Villanueva, Jun, 2019

My credit score is abut 660, but has dropped in the last six months. It used to be over 720. I have about $23,00 in unsecured debt, mostly credit cards (18K) and two small personal loans (5K combined). What option do you recommend to get out of debt? Thanks.

DDaniel Cohen, Jun, 2019

I need more information to make a specific recommendation. For example, do you know the reason your credit score is dropping? How much has your debt increased on your credit cards in the last six months?

Based on what you shared, I suggest you look into three different solutions for getting out of debt. Weigh the pros and cons of each. Below the 3 options, I am sharing a link to our Financial Health Survey.

1. A debt consolidation loan. The loan would pay off your current debts and you would have one monthly payment. To see if you qualify, visit this page- and use the rate table on the page (scroll down a little bit to find the rate table). Fill in your Estimated Credit, Zip Code (Zip may automatically fill in), the size of the loan you seek, and choose a loan purpose from the drop-down. You will see loan offers from lenders. with no effect on your credit score. 2. 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. Call Consolidated Credit Counseling at (844) 432-0140 to see what they can do for you. 3. 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.

How to handle your situation is based on your overall financial situation. I recommend you take a quick, free Financial Health Survey at our website, at After you take it email me at We can strategize and I will share my best advice.