Debt & credit comparison
Compare ways to pay down debt
Every debt option trades something: interest, fees, your credit score or time. This page lays the main options side by side so you can see which trade-offs you are willing to make.
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Debt options at a glance
| Option | How it works | Typical costs | Credit impact | Next step |
|---|---|---|---|---|
| Credit counseling / debt management plan | A nonprofit counselor reviews your budget. A debt management plan combines card payments into one monthly payment, often at reduced interest negotiated with creditors. | Counseling is often free. Plans usually have modest setup and monthly fees, which are limited in many states. | Accounts on the plan are usually closed. Paying on time can help your credit over time. | Read the guide |
| Debt consolidation loan | A personal loan pays off several debts, leaving one fixed payment and payoff date. | Interest (APR) and sometimes an origination fee taken from the loan amount. | A hard inquiry when you apply. Can help if you pay on time and avoid new card balances. | Read the guide |
| Balance transfer card | Move card balances to a new card with a low or 0% intro rate for a set period. | A balance transfer fee, usually a percentage of the amount moved. The regular rate applies after the intro period. | A hard inquiry and a new account. Works best if you can pay the balance off within the intro period. | Read the guide |
| Debt settlement | A company negotiates with creditors to accept less than you owe, usually while you save into a dedicated account. | A fee, often a percentage of enrolled or settled debt. Forgiven debt may be taxable income. | Usually significant, since accounts typically fall behind during the program. Creditors are not required to settle. | Read the guide |
| Bankruptcy | A legal process under Chapter 7 (liquidation) or Chapter 13 (repayment plan) to discharge or restructure debt. | Court filing fees and usually attorney fees. Credit counseling is required before filing. | The most severe. It can stay on your credit report for up to 10 years. | Read the guide |
Red flags to watch for
Fees before results
Under the FTC's Telemarketing Sales Rule, debt relief companies that sell by phone generally cannot charge fees before they settle or change at least one of your debts.
Guaranteed outcomes
No one can promise that creditors will settle or that a specific amount will be forgiven.
"Stop paying" with no plan
Stopping payments can lead to late fees, collections and lawsuits. Understand the risks before you do it.
"New government program"
Pitches that claim a special government debt forgiveness program for credit cards are a common warning sign.
Common questions
Where can I check my credit report for free?
AnnualCreditReport.com is the official site for free credit reports from Equifax, Experian and TransUnion. Reports are available weekly.
Is forgiven debt taxed?
Canceled debt can count as taxable income, and creditors may send a Form 1099-C. There are exceptions, such as insolvency. A tax professional can tell you how it applies to you.
How do I find a legitimate credit counselor?
Look for a nonprofit agency whose counselors are certified, and ask about every fee up front. The U.S. Trustee Program keeps a list of agencies approved for pre-bankruptcy counseling.