Debt Relief

Debt relief summary:

• Debt relief is the process of restructuring debts to make them more manageable. 

• Debt relief could also mean getting partial or full debt forgiveness.

• A debt relief strategy could help you gain more control over your finances. 

Debt relief definition and meaning

Debt relief is any action that helps you manage or deal with your debts. Sometimes debt relief involves reorganizing your debt to make it more manageable. Other times, debt relief means full or partial debt forgiveness. The main idea is to get relief from overwhelming debt.

More about debt relief 

If you have a lot of debt and are struggling, you may benefit from debt help. 

Most of us take on debt at some point in our lives. Debt can become overbearing for any number of reasons, including medical events, job loss, and divorce. Having debt doesn’t make you a bad person. It makes you human. A debt relief option could help you improve your financial situation and move forward.

A debt relief strategy could bring you any of these benefits: 

• Reduce your monthly payments 

• Lower or eliminate some debts

• Save money on total interest charges if you optimize your debt to a lower interest rate 

• Get more time to pay off your debt 

• Get caught up on debts you want to keep, like a mortgage

• Get back on your financial feet so you can plan for your future

Types of debt relief

Debt relief could take any of these forms:

Debt resolution

Debt resolution means negotiating with your creditors and lenders to reduce the amount of debt you owe. You pay the lower amount and they forgive the rest. 

If your creditor agrees to reduce your debt, you might be asked to make a lump sum payment in exchange for having some of your debt forgiven. Or your creditor might agree to let you make a series of payments. 

Bankruptcy

Bankruptcy is a legal process for dealing with debt through the courts. 

Bankruptcy could help you eliminate or reduce your debts. There are strict rules, and the process is complicated. A bankruptcy attorney can help you determine if it's an ideal debt relief solution for your financial situation. 

Debt consolidation

Debt consolidation is when you use one new loan to pay off more than one smaller debt. This could be a good strategy if you qualify for better terms on the new loan (compared to your current debts).

If you have multiple high-interest debts, you might get any of these benefits from debt consolidation:  

• Organize your finances 

• Fewer monthly payments 

• Lower monthly payments if your consolidation loan has a lower interest rate

• Pay off debt faster if you get a lower rate but keep paying the same amount 

• Lower total interest charges if you get a lower rate and don’t take longer to pay off the debt