Debt help

Which debt option does the least damage?

Start with no-cost counseling. Compare consolidation, settlement, and bankruptcy only if the math still does not close.

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See the costs behind these options

Low cost

Nonprofit credit counseling

ask for a written quote

20–25%+

Settlement fee, often charged on enrolled debt

plus possible tax on forgiven debt

7 yrs

How long most marks stay on your file

settlement or bankruptcy

Sources: CFPB on counseling, CFPB on settlement fees, and IRS on canceled debt. Run the settlement numbers →

Start with the least damaging option

Move down only when one cannot work.

Credit counseling

A nonprofit reviews your budget and may lower rates through a debt plan.

Cost: no or low cost; plans may add fees

Debt consolidation

One loan or balance transfer replaces the rest. It helps only if the rate drops.

Cost: interest + any fee

Debt settlement

You stop paying creditors while the firm tries to settle for less. Expect credit damage, calls, possible lawsuits, and tax.

Fee: often 20–25%+ of enrolled debt

Bankruptcy

A legal reset when the other options do not work. Some debts remain.

Cost: filing + attorney

Compare all 4 side by side

Compare options from lower cost and risk · get every fee in writing
Option	Typical cost	Credit impact	The catch
Credit counseling	No or low cost; plan fees may apply	Low / neutral	Needs a steady budget Start here
Consolidation	Interest + fee	Low	Only helps if the rate drops
Settlement	Often 20–25%+ of enrolled debt	Sharp drop	Possible tax on forgiven debt
Bankruptcy	Filing + attorney	Sharp drop, 7–10 yr	Public record; not all debt clears

⚠ Why settlement is a last resort

For the right person, settling for less can beat years of minimum payments that never touch what you owe. You still deserve the whole picture first.

Your credit drops, because you go delinquent on purpose. Creditors can keep calling, and can sue you, while you wait. And the forgiven part is usually taxed as income — wiping out $10,000 can come with a tax bill on the forgiven amount.

✓ Settlement is worth weighing if

You're deep in unsecured debt with no realistic path to pay in full.
You're already behind, or about to be.
You've compared all four options above and this one still wins.

✕ Look elsewhere first if

You can cover more than the minimum payments.
The debt is secured — a car or house won't settle this way.
A no-cost counseling plan would get you there without the credit hit.