How debt relief programs can help pay off your loans

Debt relief programs can help with managing loans but consider the pros and cons. (iStock)

If you're feeling in over your head with student loans, personal loans or credit cards, you may consider looking into debt relief programs for help. 

"Debt relief programs offer a person a way to effectively get out of overwhelming debt," said Ryan Moore, founder and CEO of Kingman Financial Group in Corpus Christi, Texas. 

Seeking assistance from a debt relief program may not be the right choice for everyone, however. There are both pros and cons to consider. 


What's good about debt relief programs

On the pro side, debt relief can offer flexibility in managing loans or other debts. That's because debt solutions can take different forms, including:

  • Credit counseling
  • Debt management
  • Debt consolidation
  • Debt settlement
  • Bankruptcy

Credit counseling involves receiving advice about the best way to manage loans and other debts. Debt management and debt consolidation focus more on repaying loans either by negotiating lower monthly payments and interest rates or combining multiple debts into a single loan. Debt management is typically better-suited for credit cards, while debt consolidation is typically a better fit for loan-related debt. 

Debt settlement or debt forgiveness is designed to help borrowers get out of debt as quickly as possible by negotiating payment for less than what's owed. That could be helpful in more extreme debt situations where bankruptcy may seem like the only way out. 


"The advantage of debt settlement over filing for bankruptcy is that you can still be in control of the negotiations, rather than being at the mercy of the courts," Moore said. 

When to consider debt relief

Debt relief programs may be able to offer help when the amount of loans you have to manage seems overwhelming or you've tried to pay down debt on your own but aren't gaining much traction. 

When comparing different debt solutions, it's important to consider what's needed to qualify. To enroll in a debt management plan, for example, you may be required to have a minimum amount of debt. Or, you may only be allowed to include unsecured loans or credit cards on the plan. 

Since debt consolidation involves applying for a new loan to pay off existing loans, qualification is typically based on your credit score. While there are debt consolidation lenders that work with borrowers who have lower scores, keep in mind that this could mean paying a higher interest rate. 


Debt settlement is usually only an option when loans or other debts are significantly past due. Creditors may not agree to accept a settlement for accounts that are still current. Additionally, you'll need to have cash on hand to pay any agreed-upon settlement amounts. 

When to think twice about getting relief for debts

If you're interested in debt relief, consider what you need help with most.

For example, you may only need credit counseling to get some perspective on what you need to do to create your own DIY debt payoff plan. Before pursuing other debt solutions, such as debt management or forgiveness, check the debt relief company's reputation and fees carefully so you know what you're paying and what you can expect to get in return.