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Disadvantages of Debt Relief Orders If your circumstances change, you may still be required to repay your creditors. Your debt relief order will appear on your credit file for six years. This may affect your ability to get credit in the future.

Bottom line. Debt relief companies work to settle your debts, reducing the total amount you owe. But in addition to a large fee, their services can come with risks, including credit damage, a large tax bill, and even potential lawsuits.

Debt settlement programs are typically offered by for-profit companies to people with significant credit card debt. The companies negotiate with your creditors to let you pay a ?settlement,? or lump sum of money that's less than what you owe. They agree that this amount will settle your debt.

If you stop making monthly payments to your debt management plan, you will be removed from the program and your rates will shoot back up to their previous levels. Some plans will drop you after missing a single payment, while others may be generous enough to allow up to three missed payments.

These methods won't crush your credit score: Consolidation loans from a bank, credit union, or online debt consolidation lender. Balance transfer(s) to a new low- or zero-rate credit card. Borrowing from a qualified retirement account, such as an IRA or 401(k).

Relief through debt management plans Your credit card accounts will be closed and, in most cases, you'll have to live without credit cards until you complete the plan. (Many people do not complete them.) Debt management plans themselves do not affect your credit scores, but closing accounts can hurt your scores.