If debt is becoming hard to manage, you have more than one option — and the right one depends on what you can afford each month, the total cost, and the risks you can accept. This guide compares the main U.S. debt options side by side: a self-managed payoff plan, hardship help from your card issuer, nonprofit credit counseling and debt management plans, consolidation, balance transfers, debt settlement and bankruptcy.
Key takeaways
- Start with an honest monthly budget — a lower payment is not the same as a lower total cost.
- If your required payments are affordable, a self-managed plan (avalanche or snowball) is usually the cheapest path.
- If they are not, call your issuers early and talk to a reputable nonprofit credit counselor before you miss payments.
- Debt settlement and stopping payments can bring fees, credit damage, collections, lawsuits and possible taxes on forgiven debt.
Compare your debt options
| Option | How it works | Typical credit impact | Main risks |
|---|---|---|---|
| Self-managed payoff plan | You keep paying every account and direct extra money to one target (highest rate or smallest balance). | Positive as balances fall and payments stay on time | Needs a budget surplus and discipline |
| Issuer hardship program | Your card issuer temporarily lowers the rate, payment or fees. | Account may be closed or noted; on-time payments still help | Temporary; terms vary; get it in writing |
| Credit counseling / Debt management plan (DMP) | A nonprofit agency reviews your budget; a DMP combines payments to participating creditors, often at lower interest. | Enrolled cards are usually closed; steady payments rebuild history | Setup/monthly fees; not every creditor joins |
| Consolidation loan | A new personal loan pays off several debts; you repay one fixed installment. | Hard inquiry and new account; can lower card utilization | Longer terms may cost more; old cards can fill up again |
| Balance transfer card | Moves card balances to a card with a low promotional APR. | New account and inquiry; utilization may improve | Transfer fee; high rate after the promo ends |
| Debt settlement | A company or you negotiate to pay less than the full balance, often after stopping payments. | Usually serious damage from late payments and settled accounts | Fees, collections, lawsuits, possible tax on forgiven debt |
| Bankruptcy | A legal process under federal law that may discharge or reorganize debts. | Severe and long-lasting | Legal costs; talk to a qualified bankruptcy attorney |
The CFPB’s comparison of debt services is a useful independent reference.
How to choose: five steps
- List every debt — balance, APR, minimum payment and due date.
- Find your ordinary-month surplus after rent, food, transportation, insurance and irregular bills.
- If minimums fit: choose a payoff order (snowball vs. avalanche) and stick to it.
- If they don’t fit: call issuers about hardship programs and book a session with a nonprofit credit counselor.
- Compare offers in writing: total cost, fees, term, what happens if you miss a payment and the effect on your credit.
Warning signs of a debt relief scam
- Fees charged before any debt is settled or reduced
- Guarantees to make debt “disappear” or to stop all lawsuits
- Pressure to stop talking to your creditors
- No written explanation of costs, risks and alternatives
See the CFPB’s guide to debt relief programs before you enroll in anything.
Debt guides
- Credit Card Debt: Five Options to Understand Before You Choose
- Before Choosing Debt Relief: Compare Affordability, Total Cost, and Risk
- Debt Snowball vs. Avalanche: Choose Where Your Extra Payment Goes
- Before a Debt Management Plan: Questions About Fees, Creditors and Monthly Payments
- Credit Card Hardship Programs: Prepare the Call Before You Miss a Payment
- Debt Validation Notice: What to Check Before Responding to a Collector
- High Interest or High Utilization: Where Should an Extra Card Payment Go?
- Your Credit Card Minimum Payment Increased: Rebuild the Budget Before the Due Date
Related: Credit scores · Credit improvement · Education & events
Debt options FAQs
What is the best way to get out of credit card debt?
If you can afford all minimum payments, a self-managed plan that targets the highest interest rate first usually costs the least. If you can’t, contact your issuers early and speak with a nonprofit credit counselor.
Will a debt management plan hurt my credit?
Enrolled cards are usually closed, which can raise utilization at first, but consistent on-time plan payments help rebuild your payment history over time.
Is debt consolidation better than debt settlement?
They are different. Consolidation replaces debts with a new loan you repay in full. Settlement tries to pay less than you owe and usually causes serious credit damage. Compare total cost and risk for your situation.
Is forgiven debt taxable?
Canceled debt can be taxable income in some cases. Ask a qualified tax professional before agreeing to a settlement.
Can I get help in Persian (Farsi)?
Yes. Mani Hatami offers credit and debt education in English and Persian — message us in Persian or use the consultation form.
Go deeper with Mani’s books
- From Debt to Freedom (Persian) — a practical guide to financial recovery and building a payoff plan.
- A to Z of Loans in the United States (Persian) — how loans, terms and costs work before you borrow.
- Credit First, Success Next (English) — rebuilding a strong credit foundation.
- Free Farsi credit e-book · All books
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Let’s talk about your situation.
Start with a free conversation to review your options, costs and risks — in English or Persian — before you decide.
Sources: CFPB debt services, CFPB credit counseling, CFPB debt relief. Reviewed November 2026. General education, not individualized financial, legal or tax advice. No specific outcome is guaranteed.