What is Debt Relief - An Overview

If you ask yourself what debt relief is, then chances are you are struggling to pay your bills. Anyone can hit a rough spot. The reasons for financial hardship vary, but the most common ones are medical expenses, job loss, or income loss. 

If you need clarification on the term debt relief, you have come to the right place. Freedom Debt Relief understands the ins and outs of debt relief and is the nation’s top debt settlement provider. We have helped over 650,000 clients resolve over $15 billion in debt since 2002. Our experience shows us that there are different reasons for financial hardship.

As the name implies, debt relief is a possible solution to your financial troubles. But, since there are a lot of hardships and your problem is unique, you want to make sure that you find the right kind of debt relief.

Debt relief definition - the short version

Debt relief is when a lender or creditor changes the terms of your debt to make it easier for you to cope with your financial and legal obligations. Possible solutions include:

• Pushing off payments.

• Reducing your interest rate.

• Canceling or forgiving part (or all) of the amount you owe.  

Ok, what is debt relief?

Yes, it is confusing because debt relief comes in many forms and varies depending on the type of debt that you have. 

Here are a few names used when discussing debt relief: debt settlement, debt resolution, and debt negotiation. Debt relief is also closely related to debt forgiveness programs, hardship programs, and bankruptcy.

There are debt relief programs for credit card debt, student loans, tax debt, and medical debt. There are even debt relief programs for countries.

The government agency, Consumer Financial Protection Bureau (CFPB), refers to debt settlement when talking about debt relief. And that is for good reason because when Freedom Debt Relief started its debt settlement program in 2002, it used the term debt relief.

 But, in all fairness, debt relief is used in a much broader context. The common thread is that you, the consumer, are getting a break in the amount you pay back to the lender, credit card company, or debt collector. Here are a few examples:

1. Temporary relief through forbearance or deferment: The creditor lets you stop making payments or make partial payments on your loan for a short period.

2. Lender or credit card company hardship programs: Your credit card company might offer a program that they call a “hardship program.” Usually, that is another name for a temporary relief program like forbearance or deferment.

3. Debt modification programs: The lender restructures your debt by lowering your interest rate or adding more years to your repayment period. You get immediate relief when your monthly payment drops. A debt management plan falls into this category. There are also student loan and mortgage modification programs.

4. Debt forgiveness programs: The creditor reduces the amount of money that you owe. Two forms of debt forgiveness are debt settlement (or debt negotiation) and bankruptcy.

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Learn more about debt relief

Freedom Debt Relief understands that debt relief only works if you match your financial situation with the right program. We want to ensure that you know how debt relief works, the different programs, and what kind of debts can be settled.