I was $55,000 in debt 2 years ago. Thanks to debt relief, I've cut more than $12,000 off that bill so far.
After losing my full-time job in 2023, my savings were nearly gone, and I found myself relying on credit cards to stay afloat. I needed stable income, not more financial setbacks.
Five months later, I finally got back to work, but the damage was done. I had defaulted on almost everything except my mortgage and utilities. My credit score had tanked, collections calls were constant, and I couldn't see a way out. It felt like I was back in the late '90s, struggling with the debt that came with the financial mistakes of my early 20s.
Back then, a debt relief program helped me reduce what I owed and set up payments I could actually manage. It worked once, so I figured it might work again.
Debt relief comes with risk, but it can be valuable
Debt relief programs help you settle unsecured debts — like credit cards, medical bills, or personal loans — for less than you owe. They negotiate with your creditors and set up a payment plan that fits your budget, so you can stop struggling with high interest and minimum payments.
Natalia Brown, chief compliance and consumer affairs officer for National Debt Relief, says, "Debt settlement is often worth considering for individuals with $7,500 or more in unsecured debt who are struggling to make minimum payments and facing compounding interest that could take years to pay off."
When you work with a debt relief program, you essentially hand over your delinquent accounts for them to handle. This comes with some risk, as you'll be asked to stop making any payments to creditors, go into default, and do some short-term damage to your credit score. It can also leave you open to possible legal action from your creditors, all of which the Consumer Financial Protection Bureau warns against.
However, a reputable program will step in to manage the situation by fielding collections calls and responding to legal actions on your behalf (if you're working with a law firm like I am).
Not every account is always able to be settled. Creditors may refuse to work with the company, or only some debts may end up being settled, which can leave you liable for the rest, often with added charges. Even if some of your debts are settled, the accumulated fees and penalties on any remaining balances may offset any savings. It all depends on your situation.
There are also tax implications to consider. Forgiven debt can be seen as income that is subject to federal taxes. I found this out the hard way when I received two Form 1099-C: Cancellation of Debt for some of the accounts I had settled and paid off in 2024.
Why I chose to go with a debt relief program
When I was considering whether debt relief was the right move, I wanted to know how much I could actually save and what the long-term effects on my financial health would be.
The company I went with told me they are often able to settle debts for 50% less than what's owed, oftentimes for more.
They made no guarantees, were upfront and transparent about any and all fees that would be charged, gave me access to a client portal that allows me to track where every dollar goes, and also provided extensive customer support to address any questions or issues I might have.
I factored in all of this, plus any potential risks to my long-term credit score, when deciding if debt relief made financial sense for me. According to the American Association for Debt Resolution, consumers save an average of 32% on settled debt. Including fees, my savings were estimated to be around that amount. Given this, the fact that my credit was already damaged, and most of my accounts were charged off, enrolling in a debt relief program serviced through a law firm made sense for getting my situation under control.
Compare debt relief options
I'm saving over $12,000
Seventeen months into my program, the law firm I work with has negotiated about $25,700 of my $55,000 of debt I enrolled with to about $13,400 in settlements — a 52% reduction in what I owed.
To keep my monthly payments manageable, I have to wait for the current settlements to be paid off before they can move forward with the rest of my creditors. This lengthens the amount of time I'll spend in the program, but doesn't add to the fees and keeps my payments affordable.
I have had good experiences with debt relief programs so far. The first one I completed in my 20s enabled me to manage my finances and repair my credit completely over time. This second time around, I've seen my credit score improve by 150 points already and have seen substantial savings.
I am at a point where I am ready to sell my house and pay off all my debt to be done with it once and for all. But if I didn't have that option, I would see the program through to the end. Is debt relief the right choice for your situation? That all depends on your situation, goals, and financial situation.
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