Start My Answer

What are Debt Relief Programs?

Dena Standley | April 23, 2024

Dena Standley
Legal Expert, Paralegal
Dena Standley, BA

Dena Standley is a seasoned paralegal with more than 20 years of experience in legal research and writing, having received a certification as a Legal Assistant/Paralegal from Southern Technical College.

Edited by Hannah Locklear

Hannah Locklear
Editor at SoloSuit
Hannah Locklear, BA

Hannah Locklear is SoloSuit’s Marketing and Impact Manager. With an educational background in Linguistics, Spanish, and International Development from Brigham Young University, Hannah has also worked as a legal support specialist for several years.

Summary: Debt relief programs help consumers manage overwhelming debt situations. These programs assist consumers in making a better plan for keeping up with their payments. SoloSuit offers debt settlement through SoloSettle to help consumers negotiate with creditors and debt collectors to resolve their debts.

Debt relief programs help consumers manage and pay off debt. Such programs entail reorganizing debt to make it easier to pay within the shortest time possible. Getting into a debt relief program means you hire a debt relief company to help you implement one or more strategies to get your debt situation under control. The program can help you:

  • Reduce the overall amount you owe
  • Lower the interest rates on outstanding debt
  • Extend the payment period
  • Secure better terms

Creditors often consider accepting the debt relief option presented by defaulting borrowers because they would rather get a reasonable percentage of their money than lose it all. Debt relief programs are open to individuals, small businesses, municipalities, and even large corporations. This article examines various debt relief programs, their pros and cons, and who qualifies for one.

Sued for credit card debt? Settle it for less.

Settle with SoloSettle

Make an Offer

What are the best debt relief programs?

The best debt relief programs first assess your debt situation and suggest the best approach to managing your debt. They will consider the amount of debt you owe, your overall credit, the interest rate on the existing accounts, and your ability to keep up with the new payment plan. These factors determine which debt relief program is best for you. Let's discuss three options you can consider.

Debt consolidation

In debt consolidations, the relief company you choose to work with will help you combine multiple debts into a single debt under a new account. The money you receive from a consolidation loan pays off your existing account balances. Ultimately, you are left with one debt to make monthly payments instead of multiple payments with different accounts and interest rates.

Another option is consolidating multiple debts using a balance transfer card. This often works if your debts mainly consist of credit card bills. The advantage of balance transfer credit cards is that they offer an introductory Annual Percentage Rate (APR) of 0%. However, you must clear the debt within the set period, or you may incur an even higher interest rate than your previous debt.

You should use caution when considering this method. Too often, you may find yourself using the credit cards you paid off by transferring a balance, creating a vicious cycle of increasing debt.

Debt settlement

Unlike debt consolidation, where the debt amount you owe may not change, debt settlement aims to lower the debt to a significantly smaller amount, enabling you to make a one-time lump sum payment or reorganize into fewer shorter-term payments. The debt relief company you hire to work with will approach your creditor and ask for a new debt amount with the promise of paying it rather than receiving nothing because the borrower cannot pay the entire amount.

Another option is to use SoloSettle. This tool allows you to stay in control of the negotiation process while still having the watchful eye of a debt specialist monitoring the entire process. Basically, it’s a tech-driven approach to debt settlement and can help you start the settlement negotiation conversation. Sometimes starting the conversation is the hardest part.

Watch this video to learn more about how to settle your debt:

Credit counseling

In credit counseling, you employ the services of a free or paid credit counselor who helps you create a budget and educates you on how to manage your money and debt. The first step a credit counselor will take is to review your finances and then work with you to devise a personalized plan. This approach will help you keep up with payments and overcome other financial challenges. Nonprofit organizations offer most credit counseling services at minimal to no cost.

Other specialized credit counselors help you develop a debt management plan and enroll you in their program. Here, you will make payments to an account you can access, but the organization pays the debt to your creditors based on the payment schedule you created together. Some credit counselors can negotiate a lower interest rate or fee waivers but rarely the overall debt amount. Note that you may be required to commit not to apply for a new line of credit while still on the program.

Has a creditor sued you for debt? Respond to the lawsuit to block a default judgment.

What are the pros and cons of debt relief programs?

Debt relief programs are diverse, and the pros and cons you experience depend on the program you decide to use. Debt relief programs often sound too good to be true. If you wonder, “What are the cons of debt relief programs,” the following table should help.

Debt Relief Pros and Cons
Pros Cons
Consolidation Simplified payments
Lower interest rates		 Debt isn't reduced
May involve origination fees or other charges
Settlement Reduced overall debt
Professional assistance		 May not reach a settlement
Credit score is affected
Credit Counseling Often free
Structured plan to pay off debt		 You must keep the plan on track
Limited new credit line options

The above table gives an abbreviated look at the pros and cons of different types of programs. Weigh each against your situation to decide which is right for you.

What kind of hardships are needed to qualify for debt relief programs?

Not everyone qualifies for some debt relief programs. For example, to get an excellent debt settlement offer, you must prove to the creditor you have serious financial hardship. To be accepted to some nonprofit offering free credit counseling services, you must meet certain hardship criteria. The following are the most common hardship situations that can get you into a debt relief program:

  • Job loss or income reduction
  • Medical emergencies
  • Financially difficult divorce or separation
  • Natural disasters
  • Unexpected catastrophic event

SoloSuit invites all consumers to use our various tools to get out of debt. Our unique approach lets you stay in charge of the process from start to finish. You have the flexibility to negotiate the best settlement deal for you. Start working on your settlement letter with SoloSettle today.

How to Answer a Summons for debt collection in all 50 states

Here's a list of guides on how to respond to a debt collection lawsuit in each state:

The Ultimate 50 State Guide

Guides on how to resolve debt with every debt collector

Are you being sued by a debt collector? We’re making guides on how to resolve debt with each one.

Resolve your debt with your creditor

Some creditors, banks, and lenders have an internal collections department. If they come after you for a debt, Solosuit can still help you respond and resolve the debt. Here’s a list of guides on how to resolve debt with different creditors.

Settle your medical debt

Having a health challenge is stressful, but dealing medical debt on top of it is overwhelming. Here are some resources on how to manage medical debt.

Guides on arbitration

If the thought of going to court stresses you out, you’re not alone. Many Americans who are sued for credit card debt utilize a Motion to Compel Arbitration to push their case out of court and into arbitration.

Below are some resources on how to use an arbitration clause to your advantage and win a debt lawsuit.

Stop calls from debt collectors

Do you keep getting calls from an unknown number, only to realize that it’s a debt collector on the other line? If you’ve been called by any of the following numbers, chances are you have collectors coming after you, and we’ll tell you how to stop them.

Federal debt collection laws can protect you

Knowing your rights makes it easier to stand up for your rights. Below, we’ve compiled all our articles on federal debt collection laws that protect you from unfair practices.

Get debt relief in your state

We’ve created a specialized guide on how to find debt relief in all 50 states, complete with steps to take to find relief, state-specific resources, and more.

Debt collection laws in all 50 states

Debt collection laws vary by state, so we have compiled a guide to each state’s debt collection laws to make it easier for you to stand up for your rights—no matter where you live.

Statute of limitations on debt state guides

Like all debt collection laws, the statute of limitations on debt varies by state. So, we wrote a guide on each state’s statutes. Check it out below.

Statute of Limitations on Debt Collection by State (Best Guide)

Check the status of your court case

Don’t have time to go to your local courthouse to check the status of your case? We’ve created a guide on how to check the status of your case in every state, complete with online search tools and court directories.

How to stop wage garnishment in your state

Forgot to respond to your debt lawsuit? The judge may have ordered a default judgment against you, and with a default judgment, debt collectors can garnish your wages. Here are our guides on how to stop wage garnishment in all 50 states.

Other wage garnishment resources

How to settle a debt in your state

Debt settlement is one of the most effective ways to resolve a debt and save money. We’ve created a guide on how to settle your debt in all 50 states. Find out how to settle in your state with a simple click and explore other debt settlement resources below.

How to settle with every debt collector

Not sure how to negotiate a debt settlement with a debt collector? We are creating guides to help you know how to start the settlement conversation and increase your chances of coming to an agreement with every debt collector.

Other debt settlement resources

Personal loan and debt relief reviews

We give a factual review of the following debt consolidation, debt settlement, and loan organizations and companies to help you make an informed decision before you take on a debt.

How to repair and improve your credit score

Debt has a big impact on your credit. Below is a list of guides on how to repair and improve your credit, even while managing major debt.

How to resolve student loan debt

Struggling with student debt? SoloSuit’s got you covered. Below are resources on handling student loan debt.

Civil law legal definitions

You can represent yourself in court. Save yourself the time and cost of finding an attorney, and use the following resources to understand legal definitions better and how they may apply to your case.

Get answers to these FAQs on debt collection

How-to debt guides

Learn more with these additional debt resources