How to qualify for debt relief this September

The right type of debt relief could be a big help for your finances, but you'll have to qualify first. Getty Images/iStockphoto

Credit card debt has become a serious problem nationwide. The total amount of credit card debt in the U.S. recently topped $1.2 trillion, the latest record-high level, and the typical cardholder is carrying nearly $8,000 in unpaid credit card balances. Delinquency rates on credit card payments are also rising, and average card APRs remain high at around 22%, meaning your credit card debt can quickly spiral out of control if left unmanaged.

As a result, juggling multiple payments while interest and fees pile up has become stressful and exhausting for many cardholders, who are now looking for ways to get rid of what they owe. There are plenty of strategies to use, but debt relief programs, in particular, exist to ease that burden, simplify payments and sometimes even reduce the total amount owed. However, qualifying isn't automatic, and the requirements can vary depending on the type of relief you're pursuing.

So, while this September is a  good time to explore your debt relief options, it's important to understand how to qualify and what each approach offers. After all, this information can be the key to choosing the solution that fits your financial goals.

Get started on a path to debt relief today.

How to qualify for debt relief this September

Here's what to know about qualifying for the different types of debt relief:

Traditional debt consolidation

Debt consolidation loans combine multiple debts into a single monthly payment, ideally at a lower interest rate. 

What it can offer: By consolidating multiple balances, you may reduce your monthly payments, lower your interest charges and pay off debt faster than you otherwise would. 

How to qualify: While it varies, lenders typically look for a credit score above 650, steady income and a manageable debt-to-income ratio (around 40% to 50%). Some lenders may approve lower scores in return for higher interest rates, however.

Compare your debt relief options and find the right fit now.

Debt consolidation programs

Debt consolidation programs work similarly to traditional debt consolidation but are run through debt relief companies. When you enroll in this type of program, the debt relief company helps you secure a consolidation loan from a partner lender. Your individual debts are paid off and you make one monthly payment each month until the debt consolidation loan is repaid.

What it can offer: In addition to simplifying payments and lowering interest charges, the main advantage of a debt consolidation program is the more lenient credit requirements compared to traditional bank loans.

How to qualify: These programs tend to have more flexible requirements than direct consolidation loans. Most companies require a minimum debt amount of a few thousand dollars and look for regular income that can cover reduced monthly payments. Credit scores could be as low as the 600 range.

Debt forgiveness programs

Debt forgiveness involves negotiating with your creditors to try and reduce the total amount owed, often with the help of a professional debt relief company.

What it can offer: Debt settlement can reduce your overall debt by 30% to 50% or more, depending on negotiations, so it can be a fast track to lowering balances, making it easier to pay off what you owe

How to qualify: These programs generally require participants to be facing serious financial hardship with $7,500 or more in unsecured debt. Participants also typically must be behind on payments or at risk of defaulting and must agree to pause direct payments to creditors to accumulate a settlement fund.

Debt management plans

Debt management plans are offered by credit counseling agencies and can help borrowers repay debt more efficiently by negotiating lower interest rates and fees on what's owed.

What it can offer: These plans don't erase debt but make it more manageable, often reducing interest rates significantly and helping borrowers pay off balances in three to five years. They also provide a structured repayment schedule and direct support from counselors.

How to qualify: Agencies evaluate applicants' income and expenses to determine whether they can afford the monthly payment requirements under the debt management plan. Applicants will typically need to have multiple high-rate accounts and be willing to limit credit card usage while in the plan.

Credit card forbearance or hardship programs

Some credit card issuers offer internal programs that can pause or reduce payments temporarily for borrowers facing financial difficulties.

What it can offer: These programs can prevent late fees and additional interest from accruing, giving you breathing room to stabilize your finances. While they don't reduce the principal, they can prevent your debt from growing worse in the short term.

How to qualify: These programs typically require proof of hardship, such as job loss, medical expenses or other income disruptions, and accounts usually need to be in good standing before enrollment. 

Bankruptcy

Bankruptcy, typically Chapter 7 or Chapter 13, can discharge certain debts or restructure repayment obligations.

What it can offer: Bankruptcy can provide a fresh start by eliminating qualifying unsecured debt or creating a manageable repayment plan. While it severely impacts credit in the short term, it can relieve overwhelming financial pressure and stop creditor harassment.

How to qualify: Those filing must demonstrate financial distress, complete credit counseling and meet eligibility requirements based on income, assets and debt type.

The bottom line

Qualifying for debt relief this September largely depends on your specific financial circumstances, the type and amount of debt you carry and your ability to demonstrate genuine financial hardship. While some solutions, like consolidation loans, require good credit, others, like debt forgiveness, are designed for those experiencing severe financial hardship. 

As you weigh the options you may qualify for, just remember that each option comes with trade-offs, whether it's an impact on your credit score, fees or tax implications on forgiven debt. Before committing, you should also carefully review the requirements, costs and potential consequences to ensure you're making the best choice for your financial future.