Debt relief, in theory, is exactly what it sounds like—a way to help lessen the burden of debt.

There are a few different ways that this is done. Generally, working through a program can help you pay off your debt faster and more effectively.

While you have debt, certain programs are not always the best option. This article will help you understand what debt relief is and what it is not as well as some signs to help you discern if it is a good option for your situation.

What do I need to know about debt relief?

Before you opt to move forward in working with a debt settlement company, there are several important things you need to consider.

  1. These companies will often claim they can reduce the amount of debt you owe by negotiating with creditors on your behalf. While this may be true, this is not done for free. Settlement companies will often charge hefty fees for their services. For you, this means additional fees and interest, not to mention more phone calls from the creditor.
  2. Some debt relief programs will instruct you to stop paying your bills while they are in negotiations. Not paying your credit cards or other loans can also result in negative marks on your credit history, which can lower your credit score.
  3. It is important to note that while some creditors will likely work with debt relief programs, others may not. Additionally, they may not agree to lower your debt by much even if they do agree to participate in the program.
  4. You should be aware that working with a settlement company may result in you having a harder time securing credit in the future.

While your credit report will not indicate if you worked with a program or not, it will show any settlements or deferments between yourself and a creditor.

Image courtesy of

Benefits to Debt Relief Programs

That being said, there are several benefits that can occur when working with a program. It can be a good tool to use if you are a good candidate. The main benefit to debt relief programs is the potential to reduce the total amount of debt owed.

A second benefit to these programs is that relief companies can often negotiate a lower interest payment on your behalf and streamline all your payments into one lump sum, which many consumers find easier to manage.

Two Major Debt Relief Companies to Consider

While there are hundreds of companies to choose from, there are two main programs that many people apply to. Here is a bit of background information about each company so you can make a decision as to which you would like to potentially work with.

Freedom Debt Relief

Freedom Debt Relief is one of the most well-known programs available. The company has been in business for 16 years and has not earned accreditation from the Better Business Bureau. However, according to the company’s website, they have a 9.1 out of 10 rating based on over 22,500 reviews.

The company only works with unsecured debt, which is a type of debt that is not tethered to a tangible asset such as a house or a car. Some examples of unsecured items include a personal loan, credit card debt, student loans or medical debt.

Freedom Debt Relief will not charge you any fee to enroll in the program, and no fees are due upfront until the debt has been negotiated and agreed upon by yourself and the creditor. Once the amount is agreed to, you can expect to pay a fee that ranges from 15 to 25 percent.

National Debt Relief

Another popular option is National Debt Relief. This company has earned an A+ rating from the Better Business Bureau and has an average rating of four out of five stars from over 464 customer reviews.

In addition to credit card debt relief, the company also offers a program that can help with the vast majority of unsecured debt as well as some types of secured debt. This includes banks, creditors, medical debt and even some automobile debt.

There are no fees to apply for the program or to enroll. However, once you agree to a settlement, you can expect to pay between 18 to 25 percent in fees to National Debt Relief.

Credit Counseling Resources

Alternatives to Debt Relief

Just because you have debt does not mean that a relief program is the best option for your situation.
There is no one-size-fits-all approach to debt management. Here are a few alternatives to credit card debt relief and when you may want to consider them:

  • Credit counseling
  • Debt consolidation
  • Bankruptcy

Credit counseling

This method is a great first step to take when you are overwhelmed with debt. You will work together with a counselor to come up with a plan, then the counselor will help set up a voluntary agreement between yourself and your creditors.

You typically pay off all your debt in three to five years, and the accounts are marked as paid in full, which can help re-establish credit.

Debt consolidation

Rather than using debt relief programs, many people may benefit from trying consolidation instead. This involves applying for a loan that will cover the amount of all your debt. Rather than making multiple payments monthly, you will instead make one single payment, often at a reduced rate.


This should be considered a last and final step. Bankruptcy can help save your home if you are in danger of losing it, but also can cause long-term damage to your credit score.

Those who are serious about paying off debt will want to carefully consider and create a monthly budget and stick to it. This should be a precursor to enrolment in any credit card debt relief programs.

You may want to earn more income to put towards debt as well. This may mean you take on side jobs or work overtime to get more cash flow, but the short-term effort is worth it in the long run.