Debt relief options compared
Updated November 8, 2026
There are five main ways to get debt under control. They range from simply getting a lower interest rate, which keeps your credit intact, to bankruptcy, which can wipe out most debts but stays on your credit report for up to 10 years.
| Option | What it does | Effect on credit | Typical length |
|---|---|---|---|
| Balance transfer card | Moves card debt to a 0% intro rate | Small, short-term dip | 12 to 21 months of 0% |
| Consolidation loan | One fixed-rate loan pays off several debts | Small dip, can improve over time | 2 to 7 years |
| Debt management plan | Nonprofit counselor gets card rates lowered | Cards are usually closed | 3 to 5 years |
| Debt settlement | Creditors accept less than you owe | Serious damage; late payments stay 7 years | 2 to 4 years |
| Chapter 7 bankruptcy | Wipes out most unsecured debt | On your report for 10 years | About 4 months |
| Chapter 13 bankruptcy | Court-approved repayment plan | On your report for 7 years | 3 to 5 years |
If you can still make your payments
Lowering the interest rate is the cheapest fix, because every dollar then goes further. Credit card rates have been above 20% for several years, so moving the balance to a lower rate can save thousands.
- A balance transfer card works best for balances you can clear before the 0% period ends. Expect a transfer fee of 3% to 5%. Our balance transfer calculator shows whether it pays.
- A consolidation loan suits larger balances. Rates depend heavily on your credit score, and many loans take an origination fee out of the money you receive. Use the debt consolidation calculator to compare it with what you pay now.
Either one only helps if the paid-off cards stay paid off.
If payments are becoming hard
A debt management plan through a nonprofit credit counseling agency keeps you paying everything you owe, but at lower interest rates the agency arranges with your card issuers. You make one monthly payment to the agency. See how debt management plans work.
If you can't repay in full
Debt settlement companies negotiate with creditors to accept a lump sum for less than you owe. It usually means stopping payments for months while you save, which damages your credit and can lead to collection lawsuits. Forgiven debt can also be taxable. See debt settlement: how it works and what it costs.
Bankruptcy is a legal process with court protection from creditors from the day you file. Chapter 7 wipes out most credit card and medical debt; Chapter 13 sets up a repayment plan and can save a home from foreclosure. See Chapter 7 vs. Chapter 13.
Watch out for
- Any company that asks for fees before it has settled or changed any of your debts. For debt relief sold by phone, that's illegal under the FTC's Telemarketing Sales Rule.
- Promises to stop all collection calls or lawsuits, or to "erase" debt.
- Pressure to sign the same day.