What Is Debt Relief?
Debt relief is a set of financial tools that can help you take control of what you owe and move on with your life
- Debt relief is an umbrella, not a single product. It covers multiple strategies for reorganizing unsecured debt, like consolidation loans, credit counseling, settlement and bankruptcy.
- Start with trusted help. Ask creditors about hardship programs and compare vetted providers before committing to any plan.
- Choose what fits your situation. For instance, settlement is usually a last resort after exploring less drastic options like consolidation or counseling.
Debt settlement companies at a glance
Accredited Debt Relief
Minimum debt required: $20,000.00
Settlement fee: A percentage of the debt enrolled, usually 25.00%
Typical time to settle: 24 to 48 months
ACDR-certified: Yes
Founded in 2011, Accredited Debt Relief is the largest debt settlement company in America. It specializes in high debt amounts — you must have at least $20,000.00 of debt to qualify for a program.
Accredited says its clients pay about 55% of their enrolled debt, not including fees. It also offers debt consolidation loans through partner lenders.
Freedom Debt Relief
Minimum debt required: $7,500.00
Settlement fee: 15.00% - 25.00% of enrolled debt
Typical time to settle: 24 to 48 months
ACDR-certified: No Freedom Debt Relief does not appear to be a ACDR-certified, but it was accredited through the American Association for Debt Resolution (AADR). The AADR was absorbed by the ACDR in May of 2025.
Clients who work with Freedom Debt Relief make an average monthly program deposit of $427. Freedom Debt Relief says that 60% of its clients get their first debt settlement within three months.
For eligible clients, enrollment includes access to its Legal Partner Network in case you get sued by debt collectors, at no additional cost.
Freedom also says that it will refund the difference (up to 100% of its collected fees) if you owe more than you did at enrollment when you complete or drop out of the program.
For more information, please read our expert Freedom Debt Relief review.
J.G. Wentworth
Minimum debt required: $10,000.00
Settlement fee: 18.00% - 25.00% of enrolled debt
Typical time to settle: 24 to 48 months
ACDR-certified: Yes
You might know J.G. Wentworth for its “It’s my money and I need it now!” commercials. This company offers many services, including debt settlement.
J.G. Wentworth settles an average of six debts for its clients, claiming an average savings of 43% before fees.
It also offers optional legal insurance in case of a debt lawsuit (for an additional, undisclosed monthly fee).
Pacific Debt Relief
Minimum debt required: $10,000.00
Settlement fee: Not specified
Typical time to settle: 24 to 48 months
ACDR-certified: Yes
Pacific Debt Relief has been in business since 2002. According to the company, it was founded as an alternative to less reputable debt settlement companies.
Pacific Debt Relief also staffs debt arbitrators who are trained by the International Association of Professional Debt Arbitrators (IAPDA).
Since its founding, it claims to have settled over $500 million in debt for its clients. Pacific Debt Relief says its clients typically pay 65% to 85% of their eligible debt, after it charges its settlement fees
National Debt Relief
Minimum debt required: $7,500.00
Settlement fee: Up to 25% of enrolled debt amount
Typical time to settle: 12 to 48 months
ACDR-certified: Yes
National Debt Relief says it has helped more than 1 million clients. Like Pacific Debt Relief, it also employs staff who are accredited by the IAPDA.
If it seems like bankruptcy is a better option for you than debt settlement, you can also start that process through National Debt Relief (though you should still talk to a lawyer before filing).
National Debt Relief says that clients who complete its program save about 20% on average after settlement fees.
What is debt relief?
Debt relief isn’t just one thing. It’s a collection of strategies that can help you manage your unsecured debt. That includes:
- Credit card debt
- Personal loan debt
- Medical debt
- Most types of private student loan debt
Some debt relief options reorganize your debt. Others grant debt forgiveness.
People often think of debt relief as the same thing as debt settlement. And it should be noted that the companies highlighted on this page are debt settlement companies. But debt relief is an umbrella term that can take many forms, with settlement as just one of those options. We’ll review and define them all here so you can make the decision that’s right for you.
Debt relief options
You can get out of debt, even if you can’t afford your current payments. The strategies that help you get out of debt are called debt relief.
Requesting relief directly from your creditors
May be best for people who’ve fallen behind due to financial hardship.
No matter how much debt you have, it’s worth asking the company you owe if it has debt relief or debt forgiveness programs.
You could qualify for extensions, modified payment plans or changes to monthly due dates. The catch? Companies don’t usually tell you about these programs — it’s up to you to ask for them.
- Mortgages: If you’re a homeowner, a mortgage modification can help keep you in your home. However, you may end up owing more money in exchange for more affordable monthly payments.
- Credit cards: For credit card debt relief, call your issuer and ask them to waive or reduce late fees. You can even ask to reduce your credit card APR, which could save you hundreds or thousands of dollars in interest.
- Personal loans and auto loans: Personal loan companies sometimes offer special repayment programs for people struggling to make payments. You may also get out of a car loan you can’t afford by renegotiating your loan terms. Your lender could temporarily lower your monthly payment, pause your loan payments or even extend your loan term.
Don’t be afraid to ask for help. Your loan company just wants you to pay back what you owe, so the person on the other end of the line may be willing to help you find terms that work for you.
- Check your recent bills. Look for instructions for reaching out to creditors. You can find contact information on your bill, online or on the back of your card, if applicable.
- Make the call. When you call creditors, explain your situation — whether you’re dealing with unemployment or an emergency — and ask what debt relief or discount programs they offer.
- Mention on-time payments. If you have a track record for on-time payments, use that as leverage when requesting payment assistance.
Debt consolidation
May be best if you’re juggling credit card bills and have good credit.
Debt consolidation uses a new loan to combine several debts into one, usually credit card and personal loan bills. This can simplify your budget (you’ll only have one debt bill to pay), save you money and/or lower your monthly payment.
Consolidating can save you money if you qualify for a lower rate than you have now. Personal loans tend to be cheaper than credit cards if you have excellent credit. Plus, interest doesn’t compound like it does on a credit card.
If you need a lower payment, consolidating can help if you choose a longer repayment term. This keeps you in debt for longer and increases your total interest, but it could mean the difference between an affordable monthly payment and one that you just can’t keep up with.
Debt consolidation is typically done using a debt consolidation loan (also known as a personal loan) or a balance transfer credit card.
Some lenders offer bad credit debt consolidation loans, but these loans are typically expensive. Explore getting a cosigner to increase your approval odds — otherwise, a secured loan may be a more affordable option.
- Check your rates. Use the LendingTree marketplace to see rates from up to five trusted lenders at one time.
- Shop your offers. It’s important to get more than one personal loan offer, since getting at least six loan offers can save you up to $3,138. (LendingTree users receive 18 personal loan offers on average!) Compare your offers side by side to see which one will save you the most money.
- Get your money. Once you accept an offer, fill out the loan agreement with your lender. And when all the paperwork is signed, your lender will send the money either directly to you or to your creditors.
Credit counseling
May be best if you want a pro to help you create a budget that works.
Credit counseling, also known as debt counseling, helps people manage their money and debt.
Credit counselors can help you adjust your budget, prioritize your bills and if needed, work with your creditors to stop them from sending you to collections through a debt management plan (more on that in a sec).
Some of the services available through credit counseling are free, like budgeting and money management workshops. Others (like debt management plans) usually have a small fee. Credit counseling is also required before someone can file for bankruptcy.
- Find a counselor. Fill out a form with the National Foundation for Credit Counseling (NFCC) to be matched with a credit counselor.
- Meet your counselor. Your first credit counseling session will take about an hour, often over the phone, but you may also meet online or in person. Before your meeting, pull information like your household income, monthly expenses and total debts.
- Ask questions. What kind of services does the credit counselor offer? Are any of them free? How many sessions will you need? Openness and honesty will yield the best conversations.
Debt management plan
May be best if you want a three- to five-year repayment plan and are OK with avoiding credit cards or loans during that time.
A debt management plan is an option that you can only get by working with a credit counselor. This is a repayment plan that will get you out of unsecured debt in three to five years. During this time, you’re typically required to stop using and/or getting credit cards and loans.
Your credit counselor will attempt to negotiate with your creditors to get a lower interest rate or have late payment fees waived, though you’ll still owe the same amount of money. They will also collect your monthly payment and send it to your creditors for you.
Debt management plans are a safe debt relief option. They may come with fees, but they’re usually small. For instance, you might have to pay a ~$50 set-up fee, plus ~$35 a month. If you’re low income, you might qualify for a fee reduction or for them to be waived altogether.
Repeat the steps provided in the credit counseling section.
Debt settlement
May be an option if you can’t afford your debt but don’t want to file for bankruptcy.
For a fee, a debt settlement company attempts to negotiate with your creditors so you may pay less than you owe.
Know that debt settlement hurts your credit score, and should only be considered as a last resort to bankruptcy. There’s no guarantee that your creditors will be willing to settle, and credit card interest and fees continue to accrue as you work the program.
Debt settlement programs typically take one to four years to complete. During that time, you’ll stop paying your creditors. Instead, you’ll save that money in a bank account that the settlement company sets up for you.
Debt collectors can still sue you — some (though not all) debt settlement companies do include access to a legal team as part of your settlement program.
Still, many debt settlement companies say that their clients save an average of 15% to 35% on the debt, after settlement fees.
Explore debt settlement options with LendingTree
Debt settlement can be risky, and not just because of the credit impact or the fees. It can also be hard to find a legitimate settlement company. LendingTree can help.
- Share your needs. Tell us a little bit about your debt.
- Get connected. We’ll show you companies that specialize in negotiating with creditors.
- Review carefully. Settlement programs can reduce your debt, but they usually hurt your credit. Compare options before you decide.
- Take the next step. If you move forward, you’ll work directly with the company you choose to set up a plan.
Disclaimer: Credit outcomes vary by individual. Responsible use may help, but results aren’t guaranteed. LendingTree does not promise credit score improvement or credit approval for any product.
Bankruptcy
May be an option if you have more debt than you can pay, are facing foreclosure, repossession and/or are being sued by debt collectors.
If repaying your debt in full feels completely out of reach, then it’s likely time to consider bankruptcy.
Though bankruptcy stays on your credit report for seven to 10 years, a LendingTree study showed that the average credit score goes up 69 points one month after filing, as filers generally have bad credit to begin with.
Further, bankruptcy also doesn’t mean that you’ll never be able to borrow again. That same LendingTree study found that 89.9% of bankruptcy filers have a new credit account one to two years after filing.
People typically file for Chapter 7 or Chapter 13 bankruptcy. Here’s the difference:
- Chapter 7 bankruptcy: After filing for Chapter 7, a professional helps sell your eligible assets to pay off some of your balances. Any remaining eligible debts are discharged (or forgiven). Most Chapter 7 cases are “no asset.” This means that, due to exemptions, the filer didn’t own any eligible assets to sell.
- Chapter 13 bankruptcy: Chapter 13 bankruptcy allows you to create a plan to repay your debts over three to five years. Any remaining eligible balances are discharged once the plan is completed.
- Talk to a credit counselor. You’ll need to work with a credit counselor first in order to file for bankruptcy.
- Talk to a bankruptcy attorney. Consult a bankruptcy attorney to help you figure out what type of bankruptcy you’ll qualify for and how to file. Find a reputable attorney in the member database of the National Association of Consumer Bankruptcy Attorneys (NACBA).
- File for bankruptcy. The next step is to file a bankruptcy petition. Learn more about how to recover from bankruptcy after you file.
Expert insights: Should you negotiate debt on your own?
We asked Matt Schulz, LendingTree’s chief consumer finance analyst and author of “Ask Questions, Save Money, Make More: How To Take Control Of Your Financial Life” about common debt relief mistakes. He wishes that people knew that they don’t have to navigate these waters alone.
“People commonly think that they have to do everything themselves. If you’re comfortable with negotiating, you absolutely can do it yourself, but you don’t have to. A nonprofit credit counselor can be an enormous help in guiding the negotiation process.”
Schulz also stressed the importance of researching how to avoid debt relief scams.
Be wary of companies that offer huge promises. Nothing attracts scammers like people struggling with debt problems.
Frequently asked questions
No, debt relief and debt settlement aren’t the same thing. The two terms are often used interchangeably, which can be confusing.
Debt relief is a list of strategies that can make it easier for you to afford your debt (like debt consolidation) or reduce how much you owe (like debt settlement).
If you see a company that labels itself as a debt relief company but actually settles debt, then it’s a debt settlement company.
Below are examples of debt relief.
- Requesting relief from your creditors: You might be able to temporarily lower your monthly payment or pause your payments, but you’ll need to call your credit card or lender to ask.
- Debt consolidation: Consolidating allows you to roll multiple credit card and unsecured loan bills into one, hopefully at a lower rate.
- Credit counseling: During credit counseling, a certified professional will review your debt and help you create a workable budget.
- Debt management plan: Debt management plans are available through credit counseling, and can help you get out of debt in three to five years. Your counselor might also negotiate with your creditors for lower rates and fees.
- Debt settlement: Debt settlement companies attempt to get your creditors to accept less than what you owe, for a fee. Still, debt settlement is risky and hurts your credit, so you should review all your options before deciding.
- Bankruptcy: You can get all or most of your debt forgiven through bankruptcy. Bankruptcy is perhaps the most drastic move you can make, but it provides a much-needed lifeline for those who have more debt than they can possibly afford.
You can get rid of debt without paying if your creditor or lender agrees to take less than you owe. This is called debt settlement, and you can do it yourself or hire a company. Bankruptcy will also get rid of most types of debt.
Debt settlement hurts your credit, but ignoring the debt altogether is likely worse. Settled debt shows on your credit report for up to seven years, but so do defaulted loans and cards. Lenders consider you in default when a debt goes unpaid for a certain amount of time.
When you settle your debt, you’re still paying a portion of it. A lender might see your attempt in a more positive light than if you didn’t try to pay at all.
You may pay taxes on settled debt if your creditor forgave more than $600, as the IRS typically treats this as taxable income. However, low-income taxpayers may be exempt if the IRS considers them insolvent.