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How to become debt-free 

Many people get into debt because 

they can’t afford to make monthly 

debt payments on top of their daily 

living expenses. You’re not alone, 

and trustworthy help is available.

Consider working with a

credit counselor

A credit counselor can help you explore ways 

to take care of your debt. Credit counseling 

organizations advise you on managing your money 

and debts and may help you develop a budget. 

They’re usually nonprofit organizations and you 

can find them in the phone book or on the Internet. 

One place to start is with the National Foundation 

for Credit Counseling, at www.nfcc.org or 

(202) 677-4300. Then check on the organization 

with the Better Business Bureau or your state’s 

attorney general or consumer protection agency.

The counselor may:

§ Offer free educational materials and workshops

§ Review your budget and come up with plan to 

address your money problems 

§ Help you decide which debts to pay first and 

understand what can happen if you stop making 

payments

§ Make an upfront agreement with your creditors 

to stop collections and not charge you late 

fees while you are in a credit counseling debt 

management program

A debt management plan

helps you control your payments 

and costs

A credit counselor can help you come up with a 

debt management plan for all your debts. You 

may make one payment to the credit counseling 

organization each month or pay period, to use 

toward payments to your creditors. 

Credit counselors usually don’t try to reduce what 

you owe. But they may lower your payments by 

having you make payments over a longer period, or

they may get your creditors to lower your interest rate.

A debt settlement plan can cost 

more and hurt your credit

Debt settlement companies often claim they can 

make a deal with your creditors to reduce the 

amount you owe. They often charge upfront fees, 

which may be illegal.

Consumer Financial

Protection Bureau
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Dealing with debt settlement companies can be risky. 

You may end up more in debt than when you started. 

That’s because most debt settlement companies:

§ Tell you to stop paying your debts

§ Tell you they will negotiate with your creditors 

and give you time to collect the money you need 

to pay the settlement

What they’re not telling you is that not paying debts 

while trying to settle them can:

§ Lower your credit score

§ Lead creditors or debt collectors to file lawsuits 

against you

§ Add late fees and interest to your account, so 

you owe more

Unless the debt settlement company settles all 

or most of your debts, the penalties and fees on 

the unsettled debts may wipe out any savings the 

debt settlement company achieves. Not paying 

your debts can also hurt your credit score and your 

ability to get credit in the future.

Warning signs of debt

settlement scams

Think twice about any debt settlement 

company that:

§ Charges you a fee before it reduces

your debt

§ Promises to make your debt go away

§ Tells you to stop talking to the companies 

you owe money to

§ Tells you to stop paying your debts

§ Tells you it can stop calls from collectors

§ Tells you it can stop lawsuits filed

against you

§ Promises your debts can be paid off

§ Says it’s going to use a “government 

program” to pay your bills

§ Tries to enroll you in a debt relief program 

without going over your budget first

§ Won’t send you information about the 

program unless you share personal 

financial information

Contact us

 Online

 consumerfinance.gov/askcfpb

 By phone

 (855) 411-CFPB (2372)

 (855) 729-CFPB (2372) TTY/TDD

 By mail

 Consumer Financial Protection Bureau

 P.O. Box 4503

 Iowa City, Iowa 52244

 Submit a complaint

 consumerfinance.gov/complaint

Consumer Financial

Protection Bureau