Learn
Three categories of debt options exist, and they work in fundamentally different ways. This section explains each one on its own terms.
Cost Calculator
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Try the advisor| Debt Relief (Settlement) | Credit Counseling (DMP) | Bankruptcy | |
|---|---|---|---|
| What it does | Negotiates enrolled accounts to resolve for less than the full balance | Repays the full principal at reduced interest rates; it does not reduce what you owe | Court process that discharges qualifying debt (Ch. 7) or restructures it (Ch. 13) |
| Total repaid | Roughly 75% to 80% of balance, all in | Roughly 110% to 130% of balance | Largely fixed cost; does not scale with balance |
| Credit impact | Significant drop during the program; enrolled accounts go delinquent by design | Accounts closed at enrollment; falling behind can revert accounts to the original rate | On the report up to 10 years (Ch. 7) or 7 years (Ch. 13) |
| Typical timeline | 2 to 4 years | 4 to 5 years | Months (Ch. 7) or 3 to 5 years (Ch. 13) |
| Tends to fit when | The full balance can't be repaid, or the budget needs a materially lower monthly payment | The budget can comfortably sustain full repayment and near-term credit protection matters | There is no source of income to sustain repayment |
NFCC and FCAA endorsement
Accreditation from the NFCC or FCAA tells you an agency meets the standards the industry set for itself. In the NFCC's case, that body was founded by creditors and its board still includes creditor executives.. Treat it as a floor on conduct, not as evidence the program is your least expensive option. It is not a cost signal, and it was never designed to be one.
Credit Counseling
Everything on file about credit counseling and debt management plans: how the program works, what it costs in total rather than per month, how agencies are paid, and how many people finish. Start with the cost explainer, then run your own balance in the Cost Calculator.
Read the full explainer: What Credit Counseling Actually Costs →
Run the numbers on your own balance →
See all credit counseling articles →
Debt Relief
How debt settlement works, what it costs all in, and the trade-offs that come with it: credit impact during the program, creditor lawsuits, and taxes on forgiven debt. Start with how the option works, then see it against the alternatives in the Cost Calculator.
Run the numbers on your own balance →See all debt relief articles →
Bankruptcy
Chapter 7 and Chapter 13 explained for consumers: who qualifies, what each costs, what gets discharged, and the counseling federal law requires before filing. Bankruptcy carries the strongest legal protection of any option covered here.
Glossary
- Charge-off
- When a creditor writes a debt off as unlikely to be collected, usually after 180 days of non-payment. The debt still legally exists and is often sold to a collector.
- Debt-to-income ratio (DTI)
- Monthly debt payments divided by gross monthly income. Lenders use it to decide whether someone qualifies for a consolidation loan.
- Judgment
- A court ruling that a debtor owes a specific amount, obtained after a creditor sues over unpaid debt. Can allow wage garnishment or bank levies depending on the state.
- Secured vs. unsecured debt
- Secured debt (mortgages, auto loans) is backed by collateral the lender can repossess. Unsecured debt (credit cards, medical bills, most personal loans) has no collateral behind it.
- Statute of limitations on debt
- The window during which a creditor can sue to collect a debt, set by state law. The debt itself doesn't disappear after this period, but it typically becomes uncollectible through the courts.
- Means test
- The income-based eligibility check for filing Chapter 7 bankruptcy. Income above a state's median may push a filer toward Chapter 13 instead.