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What is Debt Relief & How it Works

If you’re struggling with credit card bills, private student loans, personal loans or other forms of unsecured debt, a debt relief company can help you get back in the black.

The term “debt relief” refers to strategies that help consumers regain control of their finances and get their debt under control. Common methods include:

• Credit Counseling: Typically nonprofit agencies that help with education, budgeting and organizing your debt. If you qualify, your counselor may also help you set up a debt management plan.
• Debt Management Plans: This involves consolidating your unsecured debt and negotiating with creditors to reduce your interest dates and fees. Once the plan is set up, you make monthly payments to the counseling agency, which in turn pays your creditors.
• Unsecured Debt Settlement: This involves negotiating with your creditors to accept less than what you owe in order to pay off your debts. Once a debt is negotiated and settled, the sum is paid in full, rather than monthly installments.
• Bankruptcy: The most extreme type of debt relief, as it damages your credit the most and stays with your credit history for the longest period of time—up to 10 years. Bankruptcy is usually seen as a last resort.

In this article, we will be focusing on for-profit debt relief companies, as they can be among the most challenging to navigate and understand as a consumer. Debt relief companies typically provide debt consolidation and unsecured debt settlement services, although not every company provides both. Here’s how it works:

You’ll start with a free consultation to review your finances and go over the options that are available to you. Next, the debt relief company will review your financial details and come up with a plan best suited to your needs and budget. If you decide to move forward, you will work with the company throughout the process, which typically takes two to four years.

Here are some important things to know:

• Debt consolidation requires a higher credit score for eligibility, so depending on your situation, this may or may not be an option for you.
• Unsecured debt settlement can help you avoid bankruptcy, potentially save you money and save time compared to bankruptcy. But the fees can be steep, you will be required to come up with money for a settlement fund, and this method can have a negative impact on your credit during the process.
• The main advantage of working with a debt relief company is that they take the burden of credit negotiations off of the consumer. This can be valuable if you are overwhelmed by your debt and don’t have the desire or ability to do it on your own. 

There are a few caveats to consider before working with a debt relief company for unsecured debt settlement: Success isn’t guaranteed, and most debt relief companies only work with people who have at least $10,000 in debt. If the debt relief company is successful in settling your debts, their fee can be 15 to 25 percent of your enrolled debt.

Depending on how much you owe, and how much is forgiven, though, this can still leave you well ahead of the game. If you’re overwhelmed and don’t know where to start on your own, it can be helpful to have a team of professionals to create a custom plan and help guide you through the process.

To figure out if you’re a good candidate for debt relief, you’ll need to consider a few key factors:

• Type of Debt: Debt relief companies only work with unsecured debts like credit cards or medical bills, not auto loans or mortgages. And if you owe the IRS, you’ll need a tax relief company instead.
• Total Owed: Most companies require you to have at least $10,000 in debt. A small number of firms may have a lower requirement, although it is not very common.
• Current Situation: If you’re overwhelmed with debt, behind on payments and can’t secure a loan or credit card with a more favorable rate, working with a debt relief company for unsecured debt settlement may be a good next step.

Best Student Loans

Over the last few decades, the cost of college has steadily increased with no clear signs of stalling. Student loans act as a lifeline for millions of people who plan to pursue higher education. On average, students borrow more than $30,000 to achieve a bachelor’s degree, with those attending for-profit school’s borrowing significantly more. And with a multitude of options available, choosing the right student loan is essential for managing costs and minimizing debt. We’re here to help break down the different types of loans, including federal and private options, their benefits, recommended choices and the criteria for selecting the best one for your needs and long-term budget. 

Student Loans Overview 

While student loans are intended to help level the playing field and expand access to continuing education, it’s important to remember that the more you borrow, the more you’ll owe, which can make it challenging to manage those monthly payments when you’re still trying to gain your footing after graduation. It’s smart to explore various ways to help offset educational costs in addition to student loans, like applying for federal grants or work-study funds, plus researching other grants and scholarships that are available, as well as tuition installment plans, to help keep costs down. 

But the truth is, often these options still fall short, and the majority of students will need to take out some type of loan to help fund their education, which makes it critical to understand the market. Generally, there are two main types of student loans: Private and federal.

Disclosure
Western Alliance Bank
The annual percentage yield (APY) is accurate as of December 2, 2025 and subject to change at the Bank’s discretion. Refer to product’s website for latest APY rate. Minimum deposit required to open an account is $500 and a minimum balance of $0.01 is required to earn the advertised APY.

Accurate as of the time of publication. The national average rate referenced is from the FDIC’s published National Rates and Rate Caps for Savings deposit products, accurate as of November 17, 2025. See the FDIC website for more information.

CIT Bank
Platinum Savings
1. Platinum Savings is a tiered interest rate account. Interest is paid on the entire account balance based on the interest rate and APY in effect that day for the balance tier associated with the end-of day account balance. *APYs — Annual Percentage Yields are accurate as of November 20, 2025: 0.25% APY on balances of $0.01 to $4,999.99; 3.75% APY on balances of $5,000.00 or more. Interest Rates for the Platinum Savings account are variable and may change at any time without notice. The minimum to open a Platinum Savings account is $100.

2. Based on comparison to the national average Annual Percentage Yield (APY) on savings accounts as published in the FDIC National Rates and Rate Caps, accurate as of November 17, 2025.

Savings Connect
1. APY — Annual Percentage Yield is accurate as of November 20, 2025. Interest Rates for the Savings Connect Account are variable and may change at any time without notice. The minimum to open a Savings Connect account is $100. Fees could reduce earnings on the account.

2. Based on comparison to the national average Annual Percentage Yield (APY) on savings accounts as published in the FDIC National Rates and Rate Caps, accurate as of November 17, 2025.