Start by separating qualifying debt from everything else
For this initial review, add credit-card balances, unsecured personal loans, medical bills, and collection accounts. Do not add mortgages, auto loans, or student loans. Those debts follow different rules and do not help a consumer reach the $20,000 threshold.
Example: $11,000 in credit cards + $5,000 in medical bills + $6,000 in an unsecured loan = $22,000 in potentially qualifying debt.
Options Arizona residents can compare
| Option | What it may do | Important limitation |
|---|---|---|
| Creditor hardship plan | May adjust payments, fees, rate, or due date. | Terms depend on each creditor and account. |
| Nonprofit credit counseling | Can provide budgeting help and may organize a debt-management plan. | Plans commonly aim to repay principal rather than settle it. |
| Debt consolidation | Combines balances into a new loan or balance transfer. | A longer term, fees, or a rising rate can increase total cost. |
| Debt settlement | Attempts to negotiate less than the full balance. | Creditors may refuse; fees, interest, collections, lawsuits, and credit damage are possible. |
What is specific to Arizona?
The Arizona Attorney General advises consumers that settlement is not guaranteed, telemarketed debt-settlement services generally cannot collect fees before a debt is settled or reduced, and consumers should review terms, fees, and policies carefully.
Provider availability, licensing, fees, and service types can vary by state. Confirm the provider’s identity and state authorization before sharing sensitive information or signing an agreement.
Avoid promises. Be cautious of anyone claiming a “government program,” guaranteed forgiveness, or a fixed percentage reduction. No legitimate review can promise what an individual creditor will accept.
Questions to ask before enrolling
- Which of my debts are eligible, and which are excluded?
- What fees will I pay, and when can they be charged?
- What happens if a creditor refuses to negotiate?
- Could balances grow or a creditor sue while funds accumulate?
- How might the program affect my credit and taxes?