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Debt relief options: Choices and consequences

debt relief options
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You’ve decided that you need some debt relief. Maybe your debt-to-income ratio is too high and stopping you from getting further credit. Maybe you just can’t afford the monthly repayments each month or you’re struggling to pay off a short-term catastrophe that went on your credit card.

The truth is that there are multiple options. And while some may take a hit on your credit file, ultimately there are lots of ways to take ownership of your debt. As long as you understand what may be at risk, then you could be on top of your debt before you know it. 

Top debt settlement provider

National Debt Relief is our top pick of debt settlement providers. As well as providing debt settlement, their debt councilors will also help you understand your debt management options.

Credit counseling

This is often recommended for those who have under $7,500 worth of debt. It’s often people who have found themselves without work for a short period of time so have lived on credit cards, or for those who needed cash fast but have struggled to pay off more than the minimum.

If your creditors know you are struggling to pay back your debts in full, they may refer you to credit counseling. There are a whole host of companies, often non-profits, who offer this service. 

Essentially, it is financial advice, so you may be recommended for further action but with smaller debt, it may be a case of just getting yourself organized with your financials and making a plan. That is what credit counseling is great at. Be advised though, they could also recommend further action.

Debt consolidation

If you have over $7,500 in debt that is spread across different places, such as loans, credit card, medical debt or student debt, then it may make sense to take out one additional loan to pay everything else off, and then keep on top of just one monthly repayment. While some personal loans do allow this function, you might find it easier to take a loan from a debt consolidation specialist. 

This is because with lower credit ratings the interest on a loan becomes higher, so you might not find yourself saving that much. Still, if your credit is still in good condition it may be worth trying an online application with a personal lender – just make sure it doesn’t impact on your credit report.

Debt settlement

If you are in a situation where you cannot pay off your debts due to circumstances such as a substantial loss of income or change in lifestyle, then you might want to consider debt settlement. Here, a company will take charge of your payments to creditors, often negotiating the debt down on your behalf, but will also charge a hefty commission. 

Still, it can save you money in the long run. Be prepared for it to make a dent on your credit score, but there are several ways you can build it back up in the long run.

The good news is that you can also go for a DIY debt settlement plan, where you talk to your creditors directly. Typically, you need to be more than 90 days behind on your payments, though the longer you haven’t paid, the more likely you’ll be able to negotiate a good settlement. 

You also need to have money to actually settle. Most creditors prefer lump-sum payments, but you may be able to negotiate payment plans. Debt settlement is usually easier if you have some hardship, such as losing a job or medical problems, that prevents you from paying other debts. 

You’ll have late payments on your report regardless of what you do, but you may persuade your creditors to mark them as “Paid as Agreed,” which is less harmful than having them marked as “Settled.”


This is the big one. If you declare yourself bankrupt then all your debts are written off. However, your credit will take a massive hit and you may find it difficult to make any sort of financial arrangement in the future. 

This includes everything from credit cards to loans and mortgages. While it may feel like a short-term solution, you’ll need extensive counseling for bankruptcy, as it is such a big decision. Be prepared for it to take years to get your credit back to even a decent level.

National Debt Relief

National Debt Relief is one of the best options for debt settlement. Customer service and debt negotiation are provided in-house, and its average rate of debt reduction is one of the highest we've found.

Gina Clarke has worked in journalism for over a decade for titles such as The Daily Mail, The Sun and Forbes. She began her career in BBC radio and now specialises in subjects such as financial technology and women’s health. She has written for the Top Ten Reviews brand on a number of different and varied topics.