Debt Options FAQ — US

Write down every balance, rate and minimum payment on one page, then call an NFCC-affiliated nonprofit credit counselor for a free session. That single call often clarifies more than any single product decision, and it costs nothing.

No. Consolidation combines what you owe into one loan or plan, usually at a lower rate, and you still repay the full balance. Settlement means negotiating to pay less than you owe, which usually damages your credit more and can create a tax bill on the forgiven amount.

Yes. Hospitals are generally required to offer financial assistance policies, medical bills are often negotiable directly with the provider's billing office, and unpaid medical debt under $500 is now excluded from most credit reports. Credit card debt has none of those specific protections.

No. Federal student loans have their own income-driven repayment, deferment and forgiveness programs managed through your loan servicer, and they generally can't be discharged through the same debt relief companies that handle credit card debt.

It depends on the route. A DIY payoff plan or a debt management plan tends to cause little to no damage if you keep making payments. Settlement usually causes the most damage, since accounts go delinquent while you save toward a settlement.

The initial session with an NFCC-affiliated nonprofit agency is free in almost every case. If they recommend a debt management plan, that carries a small monthly fee, but the counseling and advice itself don't cost anything.

Often, yes. If a creditor forgives $600 or more, they typically send a 1099-C, and the IRS treats that amount as income unless an exclusion such as insolvency applies. Check IRS Topic 431 before agreeing to any settlement.

Under the Fair Debt Collection Practices Act, they generally have to stop once you tell them, verbally or in writing, that your employer doesn't allow it. You can also tell them in writing to stop contacting you altogether, with some exceptions.

Snowball pays off the smallest balance first for quick wins; avalanche pays off the highest interest rate first to save the most money. Avalanche is usually cheaper overall, but snowball can be easier to stick with.

Not always. For some people it's the fastest, most honest reset available, especially compared to years inside a settlement program. It depends on the type and size of the debt, your income, and what you'd keep or lose under Chapter 7 versus Chapter 13.

Check whether they're upfront about fees before any work is done, whether they're transparent about who they are, and whether they promise a specific result. Charging large fees before settling a single debt is against federal rules for phone-solicited offers.

No. Every rule, agency and figure on this site reflects US law and US providers. If you're dealing with debt in another country, the underlying ideas may help but the specifics won't match.