Debt Relief Options: How to Choose the Right Solution for Your Debt
- Debt relief options include DIY negotiation, credit counseling, debt consolidation, debt settlement, and bankruptcy.
- The right option depends on your income, your credit, and how much you owe.
- Debt relief isn't a free lunch. There are downsides, including potential credit score damage and very high payments, depending on what route you choose.
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Free up cash each month with Freedom Debt Relief
Ozzy S., Freedom client²
“Right away, I had more money each month because of program costs so much less than what I was paying on my minimums.”
If you are struggling with debt, you aren't alone.
A credit card balance on its own doesn't mean you're doing anything wrong. Debt relief becomes worth exploring when you're falling behind on payments, making only minimum payments, or feeling overwhelmed by what you owe. This guide explains the different ways to deal with debt to help you decide which one is right for you.
An Overview of Your Debt Relief Options
Freedom Debt Relief's own client data shows average credit card balances range from about $9,100 for people in their 20s to more than $16,500 for people 51 and older. Carrying a balance is common at every age. Here's a quick overview of the main paths to the other side of your debt:
DIY negotiation: Contact your creditors directly and ask for a lower rate, a hardship plan, or a settlement.
Professional debt settlement: A company negotiates with creditors to settle your debt for less than you owe.
Credit counseling / debt management plan (DMP): A nonprofit counselor consolidates your payments and may lower your interest rate.
Debt consolidation: Not a “debt relief” solution but a good strategy for some borrowers. You use a new loan to repay more than one smaller debt, leaving you with one fixed payment instead of multiple.
Bankruptcy: Legal protection that discharges (forgives) or restructures your debt through the courts.
Compare Your Debt Relief Options
DIY negotiation
Contact your creditors directly and ask about hardship programs, payment modifications, or a lower rate. You could also negotiate a settlement yourself by offering less than you owe as payment in full. This works best if you have cash saved and are able to document a genuine financial hardship. DIY negotiation costs nothing but takes time, and not every creditor will agree to negotiate.
Debt settlement
With debt settlement, a company negotiates with your creditors to accept less than the full amount you owe. You build funds in a dedicated account, which you own and control, while the company negotiates on your behalf. A debt settlement program typically takes at least two to four years to complete and has a negative impact on your credit.
Before you hire any company, find out how their debt settlement program works. Confirm what it charges, how long the program typically takes, and whether the company works with all of your creditors. Avoid any company that guarantees a specific result or asks for debt settlement fees before it settles a debt.
Credit counseling and debt management plans
With credit counseling, a nonprofit agency reviews your finances to determine whether you’re eligible for a debt management plan (DMP). In a DMP, you make one monthly payment to the agency, which pays your creditors, often at a reduced interest rate. A DMP is designed to fully repay your unsecured debts in three to five years, and you'll probably need to close the credit cards included in the plan.
Debt consolidation
Debt consolidation rolls multiple debts into a single new loan, ideally at a lower rate than what you're paying now. Options include a personal loan, a home equity loan, or a balance transfer credit card. Consolidation works best for people with fair to good credit, since the lowest rates typically require it. Debt consolidation doesn't reduce what you owe, only how you repay it.
Bankruptcy
Bankruptcy gives you legal protection from creditors through the courts. Chapter 7 discharges (wipes out) most unsecured debts, often within a few months, if you meet the income requirements. Chapter 13 sets up a three- to five-year repayment plan. Bankruptcy stops collection efforts, including foreclosure, as soon as you file. Chapter 7 bankruptcy stays on your credit reports for 10 years, and Chapter 13 remains for seven years. Both create a public record
Pros and Cons Comparison Table
Debt relief option pros and cons:
Debt relief option pros and cons
| Debt Relief Options | Pros | Cons |
|---|---|---|
| Negotiating debt yourself | Avoid paying debt settlement fees. Potentially resolve debts for less than the full balance and get rid of your debt faster than by making minimum payments. | Negotiations can be emotionally difficult. Collection activity will increase. Creditors could sue. Significant credit score damage likely, and potential tax consequences. |
| Debt management plan (DMP) | Get professional help and possible reduced interest rates and fees. Less serious credit impact than bankruptcy. | No debt forgiveness. Credit cards are likely closed. Takes 3-5 years to complete. DMP payments might still be unaffordable for people with high levels of debt. |
| Debt consolidation | Possibly save money on interest by moving your high interest debts to a new lower-APR loan or credit card; Simplify multiple accounts into one payment | Not available for most people with less-than-fair credit. No debt forgiveness. |
| Debt settlement program | Could get rid of debt faster than by making minimum payments. Potential for significant debt reduction | Creditors are not guaranteed to negotiate and may sue you. Potential tax bill. Credit damage. |
| Bankruptcy | Could wipe out unsecured debts. Legal protection from creditors. | Credit damage. Not all debts can be discharged in bankruptcy. Not everyone qualifies for Chapter 7 (clean slate) bankruptcy. |
How to Choose the Right Debt Relief Option
Use these quick pointers to narrow your options:
Short-term emergency, steady income: Start with your creditors. Ask about hardship programs or negotiate directly.
Manageable debt, want to keep repaying in full: Consider debt consolidation or a debt management plan.
High debt, falling behind, want to avoid bankruptcy: Debt settlement is worth exploring.
No realistic way to repay, need legal protection: Talk with a bankruptcy attorney.
Financial freedom is closer than it feels once you understand your options. Explore options for debt relief to regain control of your finances. It doesn't matter how old you are or what your FICO Score or credit utilization is. Take the first step toward a brighter financial future today.
Debt relief stats and trends
We looked at a sample of data from Freedom Debt Relief of people seeking a debt relief program during February 2026. The data uncovers various trends and statistics about people seeking debt help.
Credit card balances by age group for those seeking debt relief
How do credit card balances vary across different age groups?
In February 2026, people seeking debt relief showed the following trends in their open credit card tradelines and average credit card balances:
Ages 18-25: Average balance of $9,117 with a monthly payment of $269
Ages 26-35: Average balance of $12,438 with a monthly payment of $369
Ages 36-50: Average balance of $15,436 with a monthly payment of $431
Ages 51-65: Average balance of $16,159 with a monthly payment of $549
Ages 65+: Average balance of $16,546 with a monthly payment of $510
These figures show that credit card debt can affect anyone, regardless of age. Managing credit card debt can be challenging, whether you're just starting out or nearing retirement.
Home-secured debt – average debt by selected states
According to the 2023 Federal Reserve Survey of Consumer Finances (SCF) (using 2022 data) the average home-secured debt for those with a balance was $212,498. The percentage of families with mortgage debt was 42%.
In February 2026, 25% of the debt relief seekers had a mortgage. The average mortgage debt was $236504, and the average monthly payment was $1882.
Here is a quick look at the top five states by average mortgage balance.
Home-secured debt - top 5 states
| State | % with a mortgage balance | Average mortgage balance | Average monthly payment | |
|---|---|---|---|---|
| California | 20 | $391,113 | $2,710 | |
| District of Columbia | 17 | $339,911 | $2,330 | |
| Utah | 31 | $316,936 | $2,094 | |
| Nevada | 25 | $306,258 | $2,082 | |
| Massachusetts | 28 | $297,524 | $2,290 |
The statistics are based on all debt relief seekers with a mortgage loan balance over $0.
Housing is an important part of a household's expenses. Remember to consider all your debts when looking for a way to get debt relief.
Regain Financial Freedom
Seeking debt relief can be the first step toward financial freedom. Are you struggling with debt? Explore options for debt relief to regain control of your finances. It doesn't matter how old you are or what your FICO score or credit utilization is. Take the first step towards a brighter financial future today.
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Author Information
Written by
Ben Gran
Ben Gran is a personal finance writer with years of experience in banking, investing and financial services. A graduate of Rice University, Ben has written financial education content for Business Insider, The Motley Fool, Forbes Advisor, Prudential, Lending Tree, fintech companies, and regional banks like First Horizon.
Reviewed by
Kimberly Rotter
Kimberly Rotter is a financial counselor and consumer credit expert who helps people with average or low incomes discover how to create wealth and opportunities. She’s a veteran writer and editor who has spent more than 30 years creating thousands of hours of educational content in every possible format.
Frequently Asked Questions About Debt Relief Options
How long does debt relief take?
A professional debt settlement program typically takes at least two to four years to complete. Debt management plans typically take three to five years. Chapter 7 bankruptcy could be completed in a few months, and Chapter 13 takes most people five years.
Will debt relief hurt my credit?
Most forms of debt relief will have some negative impact on your credit. The best way to protect your credit standing is to fully repay your debts with on-time payments.
What types of debt can be included in debt relief?
Debt relief, via debt settlement programs or debt management programs, is only available for unsecured debts, such as credit card debts, medical debts, personal loans, and some private student loans. Secured debts (like an auto loan or mortgage) are not candidates for debt relief. If you have a deficiency balance on a secured debt, such as money you still owe your lender after your car was repossessed, that debt is eligible for debt settlement.
How much does debt relief cost?
Credit counseling agencies charge a modest monthly fee for their services, typically $20 to $50. Debt settlement programs generally charge a fee ranging from 15%-25% of enrolled debt, and you only pay after your debt gets settled.
Credit Card Debt
Debt Relief
