Debt can quietly pile up and become overwhelming, especially when interest rates keep rising. Fortunately, there are several ways to get back on track, but it’s important to weigh the pros and cons of each solution before proceeding.
Debt Relief Explained
There are a variety of strategies or programs that you can follow to reduce the amount of debt you owe. Following the right strategy can reduce your risk of defaulting on loans or filing for bankruptcy.
3 Debt Relief Options to Consider
Credit Counseling
Paying down unsecured debt like credit cards, personal loans, or medical bills can be overwhelming. But a certified credit counselor can work with you to build a workable budget. Counselors through nonprofit credit counseling agencies are required to promote financial responsibility through free education and counseling services, meaning you don’t have to worry about accruing more debt or paying hidden fees. If you need more help than a credit counseling session, it might be time to try a debt management plan (DMP).
Debt Management Plan
If paying down your debt in three to five years sounds impossible, a debt management plan (DMP) can help. Through a DMP, your credit counselor can work with your creditors to reduce your interest rate and consolidate your credit cards into one monthly payment that works for your specific situation—allowing you to pay back your debt more efficiently and with expert support.
Debt Settlement
Debt settlement companies promote that they can help you pay off your debt for less than you owe. However, there’s no guarantee they’ll be successful, making debt settlement a risky option. Typically, these companies will advise you to stop paying on your loans while they enter settlement negotiations. During this time, your account will become delinquent and your credit score will take a hit, potentially impacting your credit history for years. Lenders may also decide not to settle, meaning you’re now in the hole more than before you started. Debt settlement companies are for-profit, third-party organizations that also charge high fees—15%–20% of your settled debt. Debt settlement is a last-resort option that should be entered into only with much thought and consideration.
Bottom Line
A 2025 Bankrate survey revealed that 46% of credit cardholders carry a balance—and of those, 23% doubt they’ll ever be able to pay it off. Carrying debt can feel overwhelming, but exploring your debt relief options is a decisive step toward regaining control and finding a solution that fits your needs.