Debt Relief Options

Your Debt Relief Options

Is credit card debt getting you down? The solution is here. There are generally 7 Debt Relief options available. We want to help you understand what each one means and how it can help. Take a look at the table below to get more information as well as pros and cons for each method of debt relief.

  • 1. Debt Assumption (Our Recommendation)

  • 2. Debt Validation

  • 3. Debt Settlement/Negotiation

  • 4. Debt Consolidation/Cash-Out Refinance

  • 5. Debt Management/Consumer Credit Counseling

  • 6. Bankruptcy

  • 7. Avoid and Ignore

Action Debt Relief's #1 Recommendation

Debt Assumption
Our #1 Recommendation

What You Should Know About Your Debt Relief Options

Debt Assumption (Better Choice)

This program enrolls your unsecured debt that qualify, by getting new terms and conditions approved by the creditors.  The assignee then makes your payments according to the new terms.  The new terms are beneficial to you, such as no more interest, no fees, no harming the credit report.  This program can protect you from lawsuits and there is no tax consequence.  You can pay the program fee over 1-36 months.


  • One Low Monthly Payment
  • Monthly Cost is Lower Than Current Minimum Payments
  • Avoids Lawsuit or Judgement
  • Debt is Dismissed NOT “Forgiveness” therefore NO 1099’s Issued
  • Avoids Wage Garnishments
  • Stops Creditor Harassment at Work and Home
  • Quick Resolution
  • Avoid Levy of Bank Accounts
  • Open or Closed Accounts, Including Collections Sold to 3rd Parties
  • Includes Attorney Legal Protection if Needed
  • You can Keep Non-Enrolled Credit Cards


  • Must Close Enrolled Credit Cards
  • Credit Impact (for 9-12 Months)
  • Not all Debt qualifies (See Program Parameters)

Debt Validation

There are companies that offer Debt Validation to GET RID of your unsecured debt using a validation process.  You sign up your debts, and when each the debt is SOLD to a third party collection company.  Since Creditor and Debt Collectors don’t always abide by all of the federal laws including the FDCPA and FCRA. You have the right to force them to prove you owe the debt and that they are abiding by all of the federal laws. If the creditor or debt collector cannot provide all of the necessary documentation and accretion information in accordance with what federal laws require, your debt could become legally uncollectible.  


  • One Low Monthly Payment
  • Monthly Cost May be Lower Than Current Minimum Payments
  • Closed Accounts, Including Collections Sold to A 3rd Party
  • You can Keep Non-Enrolled Credit Cards


  • NO Attorney Legal Protection Included
  • Credit Impact during the program
  • Debt can move around or be transferred
  • Debt is NOT Assumed
  • Work’s best when Debt is with 3rd Party
  • Creditor May Have Already Issued a 1099
  • Open Accounts don’t qualify
  • Creditor Harassment / Collection Calls

Debt Settlement/Negotiation

Working with a company, you make monthly deposits into a trust account. When you save enough funds, the debt settlement company will negotiate with your creditors up to a 50% reduction in your debt. The Debt Settlement company will charge you 15-25% of your debt to do this work, so if you got the 50% reduction, that would bring your cost to 65-75% of your debt. Then you keep adding to the trust account until you have enough for them to negotiate the second debt, etc. Whatever amount is forgiven, you get a 1099 at the end of the year and pay tax on that amount as if you earned the money.  If you are in a 25% tax bracket, you could pay 100% of your debt using debt settlement method.


  • Significant savings over making minimum payments
  • One low monthly program deposit
  • Faster than making minimum payments


  • Extra Taxes – 1099’s Issued for forgiven Debt
  • No Guarantee that debt will be Resolved
  • No monthly payment made to creditors (They are held in a secured account until accepted)
  • Creditor Harassment / Collection Calls
  • Debt is NOT Assumed
  • Up to 7 Years after end of Program to Clear Credit Report
  • Legal Risk (Subject to being Sued or collection by Creditors or Collectors)
  • Major Impact to Credit Report
  • Results vary
  • NO Attorney Legal Protection Included
  • NO Attorney Legal Protection Included

Debt Consolidation/Cash-Out Refinance

With Debt Consolidation you take out one loan to pay off all your debt. This loan may carry a lower interest rate than your debts. You make fixed monthly payments on the loan until it is paid off in 3 to 5 years.  Cash-Out Refinance requires you to work with a mortgage lender. You refinance your mortgage, taking out additional cash beyond the mortgage balance. You use that money to pay your debts.


  • One predictable monthly payment
  • Reduced Monthly Payment
  • No Creditor Harassment
  • High-interest debts paid off
  • Tax-deductible interest payments (Cash-Out Refinance)


  • Need good credit
  • No reduction on principal
  • May Need to be Secured with Real Property
  • Need to own a home (Cash-Out Refinance)
  • Increased foreclosure risk (Cash-Out Refinance)
  • Adds to mortgage debt (Cash-Out Refinance)

Debt Management / Consumer Credit Counseling

The credit counseling services provide a debt management plan and work with you and your creditors to set up an affordable payment plan for your unsecured credit cards and offer lower interest rates that have been pre-negotiated with your creditors. They manage the repayment of your debt. Instead of making payments to a variety of creditors every month, they will set up one automatic withdrawal from your bank account on the same date each month.


  • Reduced Interest Rates
  • Stops Late & Over The Limit Fees
  • One Easy Monthly Payment
  • Stops Collection Calls
  • Workable Budget


  • Pay Off Takes 5 Years
  • Payments Could Be Higher Than Your Current Monthly
  • Damage to Credit
  • No reduction on principal


Bankruptcy is a legal process. All your assets are evaluated and used to pay off your debts. Chapter 7 and Chapter 13 are most common options used by individuals. Most people today rarely qualify for a Chapter 7 which may get rid of all debts.  Usually, the court will award a Chapter 13, which means you give the court all your income, they give you an allowance to live on, and they take the rest to split between all your creditors. Once the bankruptcy is complete, you are relieved of the debt obligations you had before filing bankruptcy.


  • Certain Debt obligation could be discharged in Chapter 7
  • Creditors are barred from attempting to collect on debts
  • Can Stop Wage Garnishments
  • Provides Quick Debt Relief - Process takes only 3-6 months
  • Attorney Legal Protection


  • Bankruptcy can keep you from obtaining a New Mortgage
  • Chapter 13 allows the court to take your funds and disburse them to your Creditors (For as long as it Takes!)
  • Chapter 13 payment plans can last for 5 years
  • Significant, long-term damage to credit (Up to 10 Years)
  • Loss of all credit cards
  • Chapter 7 difficult to qualify for
  • High Attorney Fees, Plus Court and Credit Counseling Fees before and after filing
  • New major purchases may need to be approved by Trustee

Avoid & Ignore

Avoiding and ignoring your debt problems sometimes seems like your only option. We understand it is difficult to face them head-on, we will help you through the process. Look through the options available here and consider them carefully.


  • Whichever strategy you choose, know that you are not alone. Millions of Americans are struggling with high-interest rates, stagnant wages, and unstable employment, but not all of them are actively looking for a solution like you are right now. So keep going!


  • If you need help understanding the differences between these options, give us a call. One of our Debt Consultants would be happy to answer any questions you have.

Ready to Get Started?

If you need help understanding the differences between these options, give us a call. One of our Debt Consultants would be happy to answer any questions you have.