On $25,000 of credit card debt at 22%
| Debt settlement | Nonprofit DMP | |
|---|---|---|
| Assumptions | Settles at 50%, 20% fee, 36 months | 8% APR, $40 monthly fee, 60 months |
| Monthly amount | about $486 deposit | about $547 payment |
| Total paid | about $17,500 | about $32,900 |
| Credit impact | Significant; accounts go delinquent | Minimal; on-time payments build history |
| Lawsuit risk while in program | Real | Low |
| Possible tax on forgiven debt | Yes, on about $12,500 | None |
| Completion | Many people drop out | Requires every payment for 3–5 years |
Example figures are estimates. Run your own in the settlement estimator.
A simple way to decide
- Start with the free counseling session. A nonprofit counselor will tell you whether a DMP payment fits your budget. It costs nothing and doesn't commit you.
- If the DMP payment fits, it's usually the safer choice: no credit damage, no tax bill, no lawsuits.
- If it doesn't fit, and you're already behind, settlement or a bankruptcy consultation is the next comparison.
Full guides: debt settlement and credit counseling.