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When debt relief does more harm than good

This Aug. 11, 2019 file photo shows Visa credit cards in New Orleans. In the current economic crisis, some consumers will seek debt relief when their obligations become overwhelming. If the Great Recession is any indicator, that means more consumers will turn to debt settlement, a risky debt relief option, rather than credit counseling, which keeps them in good standing with creditors. (AP Photo/Jenny Kane, File) This Aug. 11, 2019 file photo shows Visa credit cards in New Orleans. In the current economic crisis, some consumers will seek debt relief when their obligations become overwhelming. If the Great Recession is any indicator, that means more consumers will turn to debt settlement, a risky debt relief option, rather than credit counseling, which keeps them in good standing with creditors. (AP Photo/Jenny Kane, File)

By SEAN PYLES of NerdWallet / Associated Press September 1, 2020 5 min read

In a crisis, long-term planning may lose out to quick and dirty solutions – regardless of the consequences.

As the pandemic and its economic fallout continue, more cash-strapped consumers could fall into this trap if the Great Recession is any indicator.

A recent report by the Consumer Financial Protection Bureau found that from 2007 through 2010, debt settlements – which can be financially risky – increased. Meanwhile, credit counseling, a debt relief option that keeps consumers in good standing with their creditors, declined.

Before you hit a moment of crisis decision-making, understand how to think through debt relief options.

WHY DEBT SETTLEMENT ISN’T ALL IT’S MARKETED TO BE