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What Are the Different Types of Debt Relief Services?

Nicole Long
Nicole Long

Various types of debt relief services exist to help people resolve problems related to debt. Each program has advantages and disadvantages that need to be taken into account. Options for debt relief include credit counseling, debt management and debt settlement.

Debt relief becomes necessary for many confronted with mounting consumer loan debt for a variety of reasons. This can stem from overindulgent spending, lack of budgeting and a reduction in income due to job loss or illness. Unfortunately, it doesn’t take much to interfere with making timely payments. Debt relief services seek to get individuals and families back on track financially.

Debt settlements allow people in debt to settle with their creditors.
Debt settlements allow people in debt to settle with their creditors.

Choosing debt relief services involves understanding the purpose and goal of each type of program. Consumers also need to pay attention to the fine print regarding topics such as fees. While a debt relief program of any kind won’t immediately improve a consumer’s credit rating, and may even lower a consumer’s credit score, the benefits of getting a handle on debt before it snowballs into legal issues, foreclosures and repossessions can outweigh the short-term downfalls.

Debt relief services can help people eliminate credit cards.
Debt relief services can help people eliminate credit cards.

Credit counseling is one of the various types of debt relief services. Counselors assist clients with creating a manageable budget and often help negotiate payment plans with creditors to help get clients back on track. This type of debt relief program works well for those who have a hard time managing money and are capable of repaying most of their debt once new payment arrangements have been made to get them current on debt.

Debt management plans are offered to help consumers who find themselves unable to pay their debts. With a debt management plan, a counselor negotiates payment arrangements with creditors, often requesting lower interest rates, balance reduction and removal of late fees, to help lower a consumer’s overall burden of debt. Then customers make payments directly to the debt management plan. The agency is then responsible for paying all creditors as agreed. Depending on how much debt needs to be repaid, plans can take years to pay off and consumers are usually restricted from applying for credit during their enrollment in the plan.

Debt settlement plans are another option for debt relief services. These plans attempt to reduce the overall debt through a settlement with creditors. This type of debt relief program can have a damaging effect on credit scores and can leave a consumer open to consequences, such as paying taxes on the portion of debt that was forgiven.

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Discussion Comments


@Monika - I think that some debt reduction services do scam people. You really have to be careful with them and if they make a promises of any kind you should head for the door because they have no way of knowing if the credit card company will accept those terms.

For example, if the debt reduction service claims that you will never be sued or that they can settle the debt for five to ten percent of the balance you should consider looking elsewhere because the credit card company can still sue you and there is no guarantee of what type of settlement they will accept.

Every company is different. Also another red flag is if the debt relief service requires you to pay them a fee every month and takes a percentage of your savings as payment. The money that they charge you can easily have been applied toward your debt if you would have settled directly with the credit card company. A lot of these companies also claim that they are able to take off negative information that is placed on your report from the credit bureau. This is not true because it is against the law.


@Azuza - I actually had a friend who got scammed by a debt relief service. She was making payments through the service and none of them were making it to her creditors! In fact, the service hadn't even called her creditors to set up a payment plan in the first place.

She was able to take matters into her own hands and get a few things settled and other accounts on payment plans. However, it wasn't a fast and easy solution like many of the commercials for debt relief services promise!


I would be very wary of signing on with any debt relief services. I've heard more than one story about people being scammed by these organizations. I read about one organization that supposedly set up payment plans for the customers but then pocketed the money the customers were paying!

Honestly, you can do a lot to get yourself out of debt by yourself. You can personally call your creditors and try to work out a payment plan-you don't need a counselor to do it for you.

There is a lot of great information about getting out of debt online. You just need to do a little bit of research and use your problem solving skills!


When I found myself in a debt I couldn't handle the first thing I did was head to a credit counseling service. Pretty much all cities offer a free service for debt help, so you don't have to part with anymore cash to solve your financial issues.

Credit counselors are great to talk with and they really help you to find workable options depending on your situation. For myself, I let my bills get out of hand and had a lot of interest racked up that made my debt seem impossible to bring down. With a credit counselor at my side I managed to get my interest waived, which ended up saving me hundreds of dollars.


If you are struggling with paying your credit card bills and have missed payments talking to a debt counselor can really help out with your situation. It is not uncommon for people to get behind on their bills, but too many just choose to ignore the problem and hope it goes away.

When I lost my job and couldn't pay my minimum payments anymore I felt really scared. A debt counselor can really run interference between you and the credit card companies. They set up a inexpensive plan that you can actually afford to pay back. In exchange for getting any money from you and slowly paying back your debt the company basically agrees to not harass you, which can be a huge relief.

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    • Debt settlements allow people in debt to settle with their creditors.
      By: Gajus
      Debt settlements allow people in debt to settle with their creditors.
    • Debt relief services can help people eliminate credit cards.
      By: Merkuri2
      Debt relief services can help people eliminate credit cards.