American consumers will be crippled by $105,000 in debt on average in 2025. But can debt relief programs really help?

Americans continue to struggle under the weight of overwhelming debt. Consumers owed an average of $104,755 by mid-2025, slightly less than $105,580 a year earlier, according to the credit bureau Experian. (1) But debt burden varies markedly by age.

Here’s the breakdown of the average balance by generation and the change since 2024:

• Generation Z: $34,328, +7.8%

• Millennials: $132,280, +1.6%

• Generation: $158,105, -0.8%

• baby boomers: $92,619, -2.1%

• silent generation: $38,460, -1.1%

These numbers reflect all types of personal debt, including auto loans, credit cards, HELOCs, mortgages, personal loans, retail store cards, and student loans. Still, it’s no surprise that many households are turning to debt relief programs for help. But before you sign up for one, it’s essential to understand how they work and if you actually qualify.

Inflation and high interest rates have made it difficult for Americans to get ahead. Rising prices of basic goods such as food and rent are forcing more people to view credit as an option to cover everyday expenses.

Debt relief programs can take various forms, such as consolidation, settlement, and credit counseling.

Consolidation involves bundling multiple debts into a single payment plan to make things more manageable for consumers. This is accomplished through a debt consolidation loan or a credit card balance transfer. Costs can vary and fees associated with debt can be incurred through consolidation, according to CBS News. (2) Be careful to read the fine print if you choose this route.

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Debt settlement companies negotiate with creditors and try to reduce the amount you owe. In exchange, they may charge a commission of 15% to 25% of the registered debt. Consumers may be wise to compare potential savings with actual cost.

A credit counselor can evaluate your financial situation, provide advice, and negotiate lower interest rates with creditors. While there are nonprofit agencies that generally charge nominal fees or work on a sliding scale, be wary of for-profit companies that may charge high fees.

In the end, consumers may want to consider the pros and cons of debt relief programs, including the impact on their credit score and tax implications. For example, the IRS may consider forgiven debt to be taxable.

Debt relief should be a last resort, especially if you are still current on your payments. Before you sign up, consider these lower-risk options first:

Build a budget: Keeping track of every purchase you make can help you identify unnecessary spending so you can redirect that money toward paying off debt.

Establish an emergency fund: This is more of a preventive measure. Give yourself a financial cushion to protect yourself against unexpected expenses that could put you further into debt.

Increase your income: Cutting expenses can only take you so far. A temporary side job or part-time job can help you attack high-interest debt faster.

If you pursue a debt relief program, consider it a new beginning, not a goal. Once your remaining balances are paid off, you may want to shift your focus to prioritizing savings and avoiding new debt.

Debt relief can help you dig yourself out of a financial hole, but staying out of it requires planning and discipline. The key is to treat the process as the first step in a long-term financial recovery, not as a shortcut to eliminating debt that will then be rebuilt.

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Experian(1); CBS News (2)

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.