Trying to choose a debt relief option can feel somewhat like going through the process of buying a car — or maybe even more confusing. After all, most of us are relatively unfamiliar with the ins and outs of various debt strategies.

With that in mind, here are some answers to three debt relief questions you’ve wanted to ask.

What are the Pros and Cons of Each Debt Relief Strategy?

Part of the process of narrowing down your options is understanding both the advantages and disadvantages of each debt relief strategy. There’s no perfect solution; each strategy has its own set of upsides and downsides. It’s your job to decide which solution can bring you benefits that outweigh its costs.

Debt Consolidation

This strategy typically involves paying off high-interest debts using a personal loan, then repaying that loan at a fixed rate over the course of several years.

Pros: If you qualify for a low-interest consolidation loan, you can reduce the interest you’ll end up paying. You will also streamline multiple debt payments per month into just one.

Cons: Not everyone will be able to qualify for a consolidation loan at a competitive rate. If you stop making payments on a loan secured by assets, you may lose whatever you put up as collateral. Further, this approach does not reduce the amount of your indebtedness.

Debt Management

Credit counseling agencies can help consumers enroll in debt management plans (DMPs) in which they make a single monthly payment to the agency, which then distributes it to creditors.

Pros: Creditors may be willing to write off your late fees or lower your interest. You also simplify repayment by working through a credit counseling agency.

Cons: You will pay fees to enroll and stay in a DMP.

Debt Settlement

Debt settlement involves negotiating with creditors. The goal is to get them to agree to accept a lesser settlement than originally owed.

Pros: You may be able to settle your debts for a percentage of what you originally owed. Working through a debt settlement program outsources the task of negotiating to a team of professionals.

Cons: You will pay a percentage of each settled debt to the program in which you’re enrolled. Any time you choose to stop paying creditors, your credit score will drop. This strategy only works for unsecured debt like credit cards and medical bills — not for mortgages, student loans, etc.


Bankruptcy is a way to legally discharge some or all of your debt.

Pros: If you truly cannot pay off your debt any other way, bankruptcy can provide a fresh start.

Cons: Bankruptcy will stay on your credit report for seven or 10 years, depending on the type. You may have to liquidate some or all of your assets to participate. You may still have to pay off some of your debts.

How Long Does Debt Relief Take?

You can expect most debt relief strategies to take three to five years — based upon how much debt you have, your income and etc.

What Are My Debt Relief Options with Bad Credit?

It can be difficult — though not impossible — to get approved for loans with bad credit. If you do get approved, you’re less likely to get a competitive interest rate. If your credit score is low because of missed payments and high levels of debt, consolidation may not be an option. Settlement, management and bankruptcy remain viable options though.

There’s a lot to learn about various debt relief strategies, so do your research before making a decision. You may find it helpful to consult with a credit counselor about your specific financial situation before committing to any one course of action.