5 Options for Debt Relief

Written by B.Denesia   // December 9, 2011   // 3 Comments


The debt epidemic in America has been on the rise since the 50’s.  Buy now and pay later has led many consumers to a mountain of unwanted debt.  Rising household debt coupled with the current economic crisis leads to people looking into other means of resolving their debts.  In 2009 the Obama administration released the Credit Card Accountability, Responsibility, and Disclosure (CARD) Act requiring the credit card companies to inform consumers of how long it will take to pay off the debt with minimum payments along with keeping card holders up to date with term changes and rate hikes among other things.  This really gave insight into what it really takes to get out of debt.

Viva Joy Health Club’s graph for Total U.S. Consumer Debt is a good indication of why people are looking into their options.

High balances and compounding interest make it hard to get ahead.  Don’t fret; there are 5 options for debt relief.

Develop a plan to pay the debt without assistance
Assuming you can pay more than your minimum payments there are a few different schools of thought on how to approach the debt payoff.  The “snowball” plan is paying off the credit card with the lowest balance first.  It is said that if you can get one paid off, it will help your motivation with the other accounts.  Another strategy is to start with the card that has the highest interest rate.  Although it may take longer, it will help your credit utilization as well as lower the overall interest paid for the month.  If you are only able to make your minimum payments then you may want to take a look at other alternatives.

Debt Consolidation
By definition, debt consolidation is taking one loan to pay off many others.  Qualifying for a loan in this economy is not the easiest thing to do.  Debt-to-income ratio plays a big factor in securing a good interest rate on a loan that brings all debt under one umbrella.  Qualifying for a consolidation can decrease monthly expense and shorten the amount of time you take to pay back the debt.  It is important to note that calculating the overall cost of a consolidation loan is worth factoring into your decision on which direction to go.

Consumer Credit Counseling (CCCS)/Debt Management
CCCS is an assistance based solution for handling your unsecured debts.  With a credit counseling service in your corner, they can reduce your interest rates with your creditors and give you one payment that will be dispersed on a monthly basis.  Overall it will put you on track to handle the debt within a 5 to 7 year window.  This option will not impact your credit score, but does impact your credit profile while you are enrolled.

Debt Resolution
Debt resolution will give you the lowest payment out of the options and will typically resolve your debt within a 24-48 month time frame.  Through debt settlement, there is a negotiation of your debts that will reduce your overall principle balance.  If you cannot afford your monthly minimum payments this may be your best option.  With debt negotiation your credit score will be impacted, apparently for the short term.  So if you NEED a lower payment and/or are falling behind on payments and already have a tarnished score, this is a great alternative to filing a bankruptcy.

If you are delinquent on your debts and one of the previous 4 options is out of reach, you may consider bankruptcy.  Bankruptcy can be a viable option if you are in over your head.  A BK will stay on your credit profile for 7-10 years but may be the best choice depending on your situation.  It will cost money up front to file and if you do not qualify for a chapter 7, and have to file a chapter 13 the judge will decide what the monthly payment will be.  The United States Court website covers these in more detail.

There are different schools of thought and pros and cons to each option.  Find which of the 5 options for debt relief might work for you based on your budget, and TAKE ACTION.


  1. By Mark Chen, January 23, 1988

    It’s not a magic solution and it doesn’t always work, but I have had success when asking my creditors to reduce my interest rate. Any little bit the rate drops helps when working to pay off the debt and asking them to cut the rate does not cost anything.

  2. By Laura, January 23, 2019

    At least there are 5 options to help the consumer with their debt problems !!!

  3. By Arthur Perez, January 23, 3812

    The ultimate goal is to pay off your debt with as little damage to your credit as possible. Fortunately, your credit can recover if it suffers in the process of getting rid of debt, however the recovery period can be very different depending on the strategy which you choose.


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