As the owner of ASAP Credit Repair, I need to be honest with you about something experts aren't saying loudly enough: credit card debt relief programs often create MORE credit damage than the debt itself.
I've seen this play out hundreds of times in my office. Someone comes in excited about a debt relief program that promised to cut their $15,000 credit card debt in half. Six months later, they're sitting across from me with a credit score that dropped 150 points, collection calls intensifying, and the debt relief company nowhere to be found.
Here's what I actually recommend after helping over 1,000 clients tackle both debt AND credit problems.
The Problem With Traditional Debt Relief Programs
Most debt relief companies operate on a simple premise: stop paying your creditors, let accounts go into default, then negotiate settlements for pennies on the dollar. Debt settlement companies typically encourage you to stop paying your credit card bills, which can have a negative effect on your credit score and may result in the creditor or debt collector filing a lawsuit while you are collecting funds required for a settlement.
What they don't tell you clearly enough:
Your credit score tanks during the process. Every missed payment drops your score 60-110 points. By the time you're ready to settle (usually 6-12 months), you've accumulated multiple 30, 60, 90, and 120-day late marks. Your score that started at 680 is now 510.
You might get sued. Creditors don't have to wait for your debt relief company to save up settlement money. They can sue you during this process. I've had clients served with lawsuits while their debt relief company told them "everything is on track."
Collection calls intensify. Your debt relief company might handle communication, but that doesn't stop creditors from calling you 5-10 times per day. The stress doesn't decrease, it increases.
Fees are substantial. Most debt relief companies charge 15-25% of your enrolled debt. On $15,000 in debt, that's $2,250-$3,750 in fees.
Tax consequences surprise people. If a portion of your debt is forgiven by the creditor, it could be counted as taxable income on your federal income taxes. If they settle your $15,000 debt for $7,500, you saved $7,500, but the IRS considers that $7,500 as income. You'll owe taxes on it.
What I Recommend Instead: The Credit Repair First Strategy
Here's what I've learned from running ASAP Credit Repair: fixing your credit opens doors that debt relief programs close.
Step 1: Start With Credit Report Clean Up
Before you even think about debt relief, clean up your credit reports. This single step can:
Remove errors that are inflating your debt. I've seen clients dispute incorrect balances and have $2,000-$5,000 removed because the amounts were wrong. That's debt you don't actually owe.
Delete duplicate accounts. The same debt reported multiple times tanks your score. Remove duplicates, and your score jumps 30-50 points immediately.
Challenge outdated negative items. Negative information should fall off after 7 years. I regularly find items that should have been removed but are still dragging down scores.
Verify collection accounts actually belong to you. Identity theft and mixed credit files happen more than you think. Challenge everything.
Real example from my files:
James came to ASAP Credit Repair with $22,000 in debt and a 580 credit score. Before discussing debt relief, we pulled his credit reports.
We found:
- One collection account of $3,200 that wasn't his (identity theft)
- One credit card showing $5,800 balance when he actually owed $4,100 (reporting error)
- Two late payments on an auto loan that were actually on time (we had bank statements proving it)
- One collection account reported by both the original creditor AND the collection agency ($1,900 duplicate)
Within 60 days of disputes:
- $5,100 in incorrect debt removed
- Two late payments corrected
- Credit score jumped from 580 to 638
His actual debt: $16,900 instead of $22,000. And his higher credit score qualified him for a 0% balance transfer card that he couldn't get before. He's now paying down that $16,900 with zero interest.
That's the power of credit repair before debt relief.
Step 2: Use Your Improved Credit to Get Better Options
Once your credit score improves through cleanup, you have access to debt management tools that weren't available before:
0% balance transfer credit cards: Transfer high-interest debt to cards offering 0% APR for 12-21 months. Balance transfer credit cards today have 0% introductory APR periods lasting anywhere from 12 to over 20 months after account opening. Pay down principal without accumulating interest.
Lower-rate debt consolidation loans: With a 640+ score, you qualify for personal loans at 7-12% APR instead of 24% credit card rates.
Credit union hardship programs: Many credit unions offer special programs for members with improved credit that include lower rates and flexible terms.
Creditor negotiations from a position of strength: When you're current on payments with decent credit, creditors are MORE willing to negotiate lower interest rates or payment plans because you're not a default risk.
Step 3: Negotiate Directly With Creditors
You don't need a debt relief company. You don't need to go through a third party to negotiate with your credit card company. Call the number on the back of your credit card and speak with a representative about your options.
Here's what works based on my experience helping clients:
Call your creditor directly and say:
"I'm experiencing financial hardship and I'm having trouble making my payments. I don't want to default, and I don't want to go through a debt settlement company. What hardship programs do you offer?"
Creditors often offer:
- Temporary interest rate reductions (6-12 months at lower rates)
- Payment plans with reduced minimums
- Hardship programs that pause or reduce payments for 3-6 months
- Settlement offers (if you have a lump sum available)
The advantage: You maintain control, avoid debt relief company fees, and often preserve your credit better than the stop-paying strategy.
Client example:
Maria owed $18,000 across three credit cards. After we improved her credit score from 595 to 651 through report cleanup, she called each creditor:
- Card 1 ($8,000 at 24.99% APR): Negotiated down to 9.99% APR for 18 months
- Card 2 ($6,500 at 22.99% APR): Enrolled in hardship program, reduced to $150/month for 12 months
- Card 3 ($3,500 at 26.99% APR): Transferred to 0% balance transfer card
She saved approximately $5,600 in interest over 18 months compared to paying at original rates. No debt settlement company. No credit score destruction. No lawsuits.
When Debt Relief Actually Makes Sense
I'm not saying debt relief programs are NEVER appropriate. They work in specific situations:
You're truly unable to pay anything. If you've lost your job, have medical issues preventing work, or face catastrophic circumstances where you legitimately cannot pay even minimum payments, debt settlement might be your only option outside of bankruptcy.
You have substantial debt ($15,000+) and are already defaulted. If you're already 90-120 days late on everything and facing lawsuits, your credit is already destroyed. At that point, settlement becomes a reasonable path forward.
You have a lump sum available for settlement. If you have $5,000 in savings and owe $15,000, creditors will often settle immediately for that lump sum. This works better than the "save up over 6-12 months" strategy most debt relief companies use.
You're considering bankruptcy. Debt settlement might be preferable to Chapter 7 bankruptcy. But consult a bankruptcy attorney first, sometimes bankruptcy is actually the better option.
My ASAP Credit Repair Approach to Debt + Credit Problems
When clients come to me with both debt and credit issues, here's our systematic approach:
Month 1: Credit Report Cleanup
- Pull all three credit reports
- Identify errors, duplicates, outdated items
- File disputes with bureaus and creditors
- Challenge collection accounts for validation
Month 2: Immediate Score Improvements
- Errors start getting removed (30-day investigation period)
- Pay down high-utilization cards if possible
- Dispute results arrive, score increases
- Apply for secured credit card if needed for positive payment history
Month 3: Strategic Debt Negotiation
- With improved score, negotiate with creditors
- Apply for balance transfer cards if qualified
- Set up hardship programs with creditors
- Create realistic payment plan based on budget
Months 4-6: Execution and Monitoring
- Make payments according to new terms
- Continue building positive payment history
- Monitor credit reports for additional errors
- Adjust strategy based on results
The typical results I see at ASAP Credit Repair:
- Credit score improvement: 40-100 points in first 90 days
- Debt reduction through error removal: $2,000-$8,000 on average
- Interest savings: $3,000-$15,000 over repayment period
- Credit damage: Minimal to none (versus 150+ point drops with debt relief)
The Hard Truth About Credit Scores and Debt
Credit card debt remains at record highs, driven by persistent inflation and elevated interest rates that make carrying a balance more costly. This is true. Debt is expensive right now. But destroying your credit to escape debt creates a cycle that's even more expensive.
Here's what happens when your credit score tanks from 680 to 500:
Apartment rentals: Many landlords require 620+ scores. Below that, you need 2-3 months' rent as deposit instead of one month. On a $1,500 apartment, that's an extra $3,000 upfront.
Auto loans: You go from 7% APR to 18% APR. On a $25,000 car over 60 months, you pay $8,000 more in interest.
Insurance premiums: Poor credit increases auto and home insurance by $500-$1,000 per year. Over 5 years: $2,500-$5,000 extra.
Employment: Some employers check credit for financial positions. Poor credit can cost you job opportunities.
Utility deposits: Electric, water, and internet companies charge $200-500 deposits for poor credit.
Future borrowing: Forget buying a house for 2-3 years minimum. Mortgage lenders want 24+ months of clean credit after major negative items.
The total cost of destroyed credit: $20,000-$50,000+ over 5 years.
That's why I push credit repair BEFORE debt relief. Protecting your credit score while tackling debt saves you more money long-term than settling debt while destroying your credit.
My Bottom Line Recommendation
If you're considering credit card debt relief for next year, here's what I recommend:
Don't rush into debt relief programs that require you to stop paying. The credit damage and stress usually aren't worth it.
Start with credit report cleanup. You likely have errors costing you points and possibly inflating your debt. Fix these first.
Negotiate directly with creditors. Most offer hardship programs that are more beneficial than debt relief companies.
Use improved credit to access better options. Balance transfers, consolidation loans, and lower rates become available at higher credit scores.
Consider debt relief only as a last resort. If you're truly unable to pay and facing bankruptcy, then debt settlement might make sense. Otherwise, avoid it.
Consult a credit repair professional first. At ASAP Credit Repair, we evaluate your complete situation, credit reports, debt levels, income, and goals, before recommending any path forward. Often, credit repair alone solves 30-50% of the "debt problem" by removing errors and improving options.
The experts saying "debt relief might make sense" aren't wrong, it does make sense in specific situations. But they're not seeing what I see every day: people who destroyed their credit chasing debt relief, only to end up in worse financial shape overall.
My advice: Fix your credit first. Tackle debt second. In that order.
If you want my team at ASAP Credit Repair to review your specific situation, we offer free consultations where we pull your reports, identify errors, and create a customized strategy that prioritizes both debt reduction AND credit preservation.
Because the goal isn't just to get out of debt, it's to get out of debt while building a financial foundation that serves you for decades to come.