Best Debt Relief Options for 2023


When used wisely, debt can be a valuable tool. A mortgage can allow you to buy your dream home. An auto loan provides reliable transportation for work. Even credit cards can benefit your finances if you use them responsibly. After all, some of them provide great perks and rewards.

However, if your debt has gotten out of control, you need to find a solution to help you manage it.

relieved woman

What is debt relief?

Debt relief is any strategy you use to get out of debt or manage your debt. It usually refers to situations in which your debt has become too overwhelming to manage on your own.

Debt relief includes debt management plans, debt elimination programs, debt consolidation, and debt settlement. It also refers to bankruptcy, although that is perhaps the most extreme method you can use.

In many cases, all companies offering debt relief options are referred to as the debt relief industry.

Learn more about each option so that you can make an educated decision about the best debt relief method for your lifestyle and situation. Each one comes with different pros and cons. By weighing each choice individually, you can find the perfect fit to help alleviate your personal debt.

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When to Get Debt Relief

There are lots of steps to take when it comes to getting debt relief. One of the first steps is to recognize you need it. This isn’t hard to determine for most people. If you can’t make your monthly payments and are stressed out financially, you may need consumer debt relief.

This is especially true if you’ve begun to use credit cards to pay for all of your living expenses. Or if you’re doing things like using payday loans for financial emergencies. If this sounds like you, then it’s time to take a step back and look at all the available options. Otherwise, you’ll fall victim to an endless cycle of bills, fees, and burdensome debt.

How to Get Debt Relief

Many people are concerned about beginning a debt relief program because they don’t know who they can trust.

This is a very valid concern and why it’s always a good idea to first seek credit counseling. Due to emotion and stress, there are many understandable fears surrounding debt relief programs and how they work.

Credit Counseling

A non-profit credit counseling agency or debt consultant can answer your questions and give you an objective perspective on the options available. They can also help to steer you away from obvious scams.

There are many reliable resources available to find a credit counselor who is thoroughly trained and only has your best interests at heart.

Most credit counselors are either free or charge only a small fee to cover their operating expenses. If a credit counseling agency wants you to pay a large sum upfront, it’s best to find someone else.

When you realize you have an urgent desire to get out of debt, it becomes easier to see what works and what doesn’t. A credit counselor can help you evaluate which programs might be best for your situation and which programs might be best to avoid.

It’s also always a good idea to thoroughly research any program you decide to use. Each one will take a different length of time to go into effect, and each will also have a different impact on your credit score.

That, in turn, affects what kind of credit you’ll be able to access in the future, so it’s wise to consider your future borrowing needs as part of the evaluation process.

What Are the Different Types of Debt Relief?

Debt relief comes in several forms, some of which can be combined into a comprehensive debt management plan or debt elimination program. Here are some of the most widely used types:

Personal Budgeting

The right budget can sometimes go a long way toward providing debt relief. Often you’ll need help creating it. It will usually work best when used with another program, like the ones we’ll talk about below.

Basics of Personal Budgeting

You’ll need to take a detailed look at how you’ve been spending over the last several months. If you haven’t recently, look at your bank and credit card statements to get an idea of all the little things you spend money on. Without you even realizing it, they probably add up very quickly each month.

With that information in mind, start your budget by finding out your monthly take-home pay. This is what you put into your bank account or wallet each month after things like taxes, health insurance, and retirement contributions are taken out.

List All of Your Monthly Expenses

Next, list out all of your monthly expenses that aren’t easily changed. These include your rent or mortgage, car payment, utility bills, cell phone bills, and minimum debt payments. Subtract that number from your take-home pay, and that’s what’s left for food, gas, paying down debt, and all your other discretionary spending.

Decrease Spending as Much as Possible

To pay down large amounts of debt, you should decrease your spending as much as possible and increase your monthly payments with that extra money.

Maybe that means getting a roommate, eating ramen instead of going out or taking public transportation instead of driving. Slash your budget with reckless abandon, and you’ll be better positioned to pay down your debt quickly and aggressively.

Debt Consolidation

This type of debt relief involves taking out a loan to pay your debts. It allows you to bundle many debts into a single, more affordable payment. You could do this in addition to personal budgeting so that you’re still paying off your debt more quickly. You’ll also be saving money on interest over time.

There are a couple of different ways to consolidate your debt.

Low or 0% APR Credit Cards

The first kind is with a credit card. If you have multiple high-interest credit cards, you may be able to consolidate them with another card that has a low introductory APR. You may even qualify for a 0% APR for several months, and sometimes for a year or longer.

You pay off your old credit cards and start making payments on the new one. Here’s the catch, though. If you have a balance remaining after the introductory period, your APR could skyrocket, leaving you with a higher balance than before. Make a repayment plan and stick to it if you choose this option.

Debt Consolidation Loans

Another debt consolidation option comes in the form of a debt consolidation loan. The plus side is that you can repay your debt over a predetermined period with fixed monthly payments. It may take a few years, but it’s a more predictable way to pay off your debt.

Debt Relief Companies

With debt relief companies, you make a lower monthly payment into a separate insured account. It will eventually be used to pay off a lower debt amount negotiated with creditors on your behalf. There are quite a few risks when working with debt relief companies. The debt relief company you work with will likely advise you to avoid making payments on your debts and instead put that money into your account.

As a result, your credit score will tank.

Not only that, you’ll likely be unable to qualify for any new credit during this period. It isn’t until you save enough money that the debt relief company actually calls your creditors to make a deal. They may claim to have existing relationships with major banks and creditors throughout the country, but there’s still a lot of risk involved. Plus, it could take years to repair your credit.

Debt Settlement Companies

When you work with a debt settlement company, they typically create a debt management plan for you. Your debts are reduced to a lesser amount or “settled.” Debt settlement companies generally work with large amounts of unsecured debt such as credit card debt. In fact, most debt settlement companies won’t even accept you as a client if you don’t have at least $10,000 in credit card debt.

Debt settlement is typically listed on your credit report for seven years. So, any future potential creditors will see your credit history when they check your credit report.

Enrolling in a debt settlement program can be very damaging to your credit score. Even if you do get approved for credit in the future, you’ll likely be paying much higher interest rates.

Another consideration with debt settlement is that the IRS may consider any settled debt as taxable income. Any amount that’s forgiven will probably need to be added to your income. So, you’ll not only owe taxes on it, but it could potentially bump you into a higher tax bracket.

The best debt settlement companies include National Debt Relief, Accredited Debt Relief, and Freedom Debt Relief.


As a last resort, you may qualify for debt relief under the Federal Bankruptcy Code. There are two types of bankruptcy for individuals: Chapter 7 and Chapter 13.

Chapter 7 bankruptcy comes with an income requirement that you must qualify for. This then allows you to discharge many of your unsecured debts. If you have secured debts, you have to give up the property that’s used as collateral, such as a car securing an auto loan. Some property, however, may be exempt from being seized.

If you don’t meet the income requirements for a Chapter 7 bankruptcy, you could consider a Chapter 13. This restructures the debts you owe based on how much of your income you can put towards them. Payment plans can last as long as five years and are basically a type of debt settlement through the court system.

Just remember that bankruptcies are also extremely damaging to your credit score and financial health. A bankruptcy can remain on your credit report for 7 to 10 years. Make sure you have weighed all of your options before you do it.

Refinancing Your Mortgage

There are fees involved with refinancing your mortgage. However, you can often save yourself a lot of money and lower your monthly payments by getting a lower interest rate on your mortgage.

This is especially a good idea when mortgage rates are low, and you bought your house at a higher rate. And you don’t have to stick with your current lender. Shop around for different rates and fees to find the best deal on the overall costs of the loan.

Cash-Out Refinance or HELOC

If you have a substantial amount of equity in your home — typically 20% or more — you could also qualify for a cash-out refinance or a home equity line of credit. You normally are required to get a home appraisal performed to confirm the value of your home. They generally cost a couple of hundred dollars.

If you qualify, these two methods allow you to utilize your home equity for other purposes, including debt consolidation.

If you can afford the associated costs and it makes sense, you could use your equity to pay off your debt. The significant benefit is that home loan interest rates are substantially lower than they are with credit cards and debt consolidation loans.

That can potentially save you an enormous amount of money compared to paying off your high-interest loans or credit cards individually each month.

Renegotiating Your Credit Card Bills

Credit card companies will sometimes negotiate new terms with you. It’s as easy as giving them a call and asking for a lower APR. It only takes a few minutes and can often make a big difference in your quest to relieve your credit card debt.

You will be surprised by how many credit card companies are willing to negotiate. It’s free, easy and the worst that can happen is that they say “no.”

If that’s the case, you can always consider transferring your balances to another credit card. But if you’re a long-time customer and make at least the minimum balance payment each month, you have a good shot at making this one work for you.

Debt relief takes a lot of work and consistency, regardless of which method you choose to utilize. But the benefits you’ll receive are invaluable. In addition to saving money on current and future interest, you’ll sleep better knowing your finances are in order.

Lauren Ward
Meet the author

Lauren is a personal finance writer who strives to equip readers with the knowledge to achieve their financial objectives. She has over a decade of experience and a Bachelor's degree in Japanese from Georgetown University.