How to Get Debt Relief in 2024 (2024)

You can get debt relief through a variety of methods—your main options are consolidation loans and balance transfer credit cards, debt payoff apps, credit counseling services, debt settlement, and bankruptcy.

Consolidation loans and balance transfer credit cards are relatively simple to get, just like applying for any other loan or credit card. Debt payoff apps and services can easily be downloaded from app stores or accessed through websites. Credit counseling and debt settlement companies, however, are more involved—they require consultations and program enrollment. And while it's possible to file for bankruptcy on your own, working with an attorney can ensure the process goes as smoothly as possible.

Debt Consolidation & Refinance Loans

Personal loans for debt consolidation generally offer interest rates that are fixed, and lower than credit cards. This means your payment won’t change from month to month, and if you refinance at a lower rate you can save money overall. Taking out a longer-term loan can make your payments more manageable, but be mindful that this can ramp up the total amount of interest you pay over time, as well. Many personal loans come with one- to five-year term lengths, but some may be available for 10 years or even longer.

Moving debt from a credit card to a personal loan can increase your credit score, because revolving debts like credit cards are penalized more heavily by credit-scoring models than installment debts like personal loans. But if you’re going to pay off credit cards with a personal loan, commit to paying off your credit cards in full each month to avoid running up a large balance again and getting into more debt. If you have trouble controlling your spending, you should be careful with debt consolidation strategies.

Personal loans may also come with origination fees, which (when charged) are often around 1% to 9% of your loan amount. Another downside is how your current debt may limit the usefulness of this strategy; to qualify for the best rates, you’ll typically need good credit. However, having a lot of debt—especially credit card debt—can lower your credit score, sometimes making it tough to get approved for better rates on a personal loan (unless you can apply with a creditworthy co-signer).

Balance Transfer Credit Cards

Another debt consolidation/refinance option is to open a 0% APR balance transfer credit card. These are credit cards that offer an introductory period with no interest on debt that you transfer over, typically 12 to 21 months (in some cases, current cardholders may get 0% offers, as well). During this period, 100% of any payments you make will go directly toward reducing your original balance, with none spent on interest, making this a good time to ramp up your extra payments, if you can.

Although some card issuers only allow you to use their balance transfer cards for credit card debt, others may allow you to transfer personal loan debt, auto loan debt, business loan debt, and more.

After the intro period ends, the interest rate will go back up to its regular level—that means any remaining balance will start accruing interest, usually at a pretty high rate. Some people with large credit card balances “surf” between balance transfer cards, opening a new one as soon as the intro period expires. However, this strategy can be limiting since you usually can’t transfer over debt from within the same company. You can’t use a Discover balance transfer card to consolidate debt from other Discover cards, for example.

You’ll typically have a brief period of 45 to 60 days after opening your new card to complete the transfer; after that, you lose the intro 0% offer. You’ll also usually need to pay a balance transfer fee, which isn’t insubstantial; it's often around 3% to 5% of the transfer amount.

Debt Payoff Apps

There are dozens of browser-based online tools and mobile apps that help you get debt relief using various strategies to pay down your debt faster. Some apps, such as Chip and Changed, allow you to round up purchases that you make with your debit or credit cards to the nearest dollar, periodically sending that cash in as an extra payment to help you pay down your debt quicker.

Other services like Undebt.it and Unbury.me allow you to input or link your debt accounts to organize and create a custom debt payoff plan, sometimes with automated payments as well. They usually encourage you to use a debt payoff strategy like the snowball or avalanche method. These programs can help motivate you to stick with a plan and/or make extra payments toward your debt by showing you exactly how much money you’ll save, and how much sooner you’ll be out of debt.

Many of these apps are free, or use a freemium-based model where extra features require a nominal subscription fee.

Credit Counseling Agencies/Debt Management Plans

Credit counselors offer tailored education and support for your specific situation. They might help you create a budget, check your credit and teach you how to improve it, or explore options to help you reach your financial goals. These consultation services are often free, although you’ll usually pay certain costs if you enroll in a debt management plan (DMP); this is the main way credit counselors can help lower your debt payments.

If you agree to a DMP, your counselor will attempt to negotiate lower interest rates with your creditors and set up a payment plan to pay off all of your debt, at a monthly payment you can afford. Your creditors may close your credit cards at this time, which can cause your credit score to decrease, and the counseling agency may require you to refrain from opening any new credit cards until you’ve completed the plan (you may be allowed to keep one card open for emergencies). You may be required to pay a setup fee, usually $75 or less, along with a monthly fee.

Debt Settlement Companies

Debt settlement companies offer an attractive proposal: Hire them, and they’ll work directly with your creditors to negotiate a settlement for less than you owe, letting you off the hook far sooner and potentially saving thousands of dollars. Plus, you won’t pay any fees if they aren’t able to negotiate a settlement; what’s to lose? While these debt relief companies do legitimately help many people, unfortunately, it’s not that simple.

To give you a bargaining chip for negotiations, debt settlement companies require you to stop making payments on the debts you enroll in the program, and instead funnel that money to a third-party savings account (which may charge a monthly fee rather than offering interest). After several months or years have passed, you’ll have defaulted on your debt and incurred many late fees—but you’ll have a pot of savings in your account that the debt settlement company will offer to your creditors in exchange for releasing you from the debt.

If your creditors accept this settlement, you’ll owe a fee of up to 30% of the debt, depending on the company (some companies charge a percentage of the enrolled debt, while others charge a percentage of the settled debt). Plus, any debt that’s forgiven will typically be counted as taxable income when you file your taxes, potentially making for an explosive tax bill as well.

Creditors aren’t required to accept a debt settlement, though—and if they don’t, your credit will still be damaged and you’ll be on the hook for the full debt balance, plus late fees and potentially even court costs if your lender decides to sue you for the debt.

Bankruptcy

Bankruptcy has a huge stigma around it, and perhaps for good reason. It’s a legal process that requires going through the court system. Many people are surprised to find out they can usually keep the things that matter to them the most, such as their home and vehicle, after bankruptcy. For many people, bankruptcy is the only option to break free from debt that they’d otherwise be carrying around for the rest of their lives.

If you can’t afford a good bankruptcy lawyer, you may be eligible for help from free or low-cost legal aid clinics.

There are several types of bankruptcy, but Chapter 7 bankruptcy is the most common, and it’s the one that people often think of: The court will sell off assets that aren’t protected by state-specific exemptions (commonly including your home and car) in exchange for discharging eligible debts over the course of a three- to four-month process. Some people, such as high-income earners and those with homes vulnerable to foreclosure, opt for Chapter 13 bankruptcy instead, which discharges eligible debts at the end of a three- to five-year court-ordered repayment plan.

Avoiding Debt Relief Scams

Unfortunately, there are many predators looking to exploit people in desperate financial situations. Here are some tips on how to avoid debt relief scams:

• Do not pay upfront fees to any debt settlement companies. This is now an illegal practice.
• Never respond to companies that reach out to you first. You should always be the one to make the first contact.
• Beware of companies that say they can remove accurate negative information from your credit reports.
• Don’t work with any companies that guarantee they can help you settle your debt; it’s illegal to make these claims.
• Consider whether you’re comfortable negotiating with your creditors on your own. Although they can help in various ways, debt settlement companies don’t offer any services you can’t do yourself.

Other Debt Relief Strategies

You don’t always need to sign up for a formal product or plan to get help with your debt. And even if you do, it’s a good idea to consider other debt relief strategies that can boost your efforts and help you become debt-free even sooner.

• Find a budgeting program or app that consistently works for you.
• Find ways to cut monthly expenses and limit overspending temptations.
• Start an emergency savings fund to avoid going into debt again.
• Try negotiating with your creditors directly for a lower rate or more affordable payment.
• Look for ways to increase your income through side hustles, part-time jobs, overtime, etc.
• Create a visualization of your goal that you can see every day, such as a debt payoff chart that you fill in on your fridge, a paper chain of links representing your debt, etc.

The Bottom Line

You don’t have to be stuck in debt. We’ve explored many options for how to get debt relief, but no matter which one you choose, it’s best to lay some groundwork before you begin.

“The first step in getting out of debt is to lock your credit cards and stop taking out new debt. Then you need to get on a budget,” says Zigmont. “It doesn’t matter what budget or app you use, what’s important is to find the one that works for you.” Only then will these other methods, such as credit counseling or bankruptcy, help you find success in staying debt-free in the long run.

You don’t have to be stuck in debt. We’ve explored many options for how to get debt relief, but no matter which one you choose, it’s best to lay some groundwork before you begin.