U.S. consumers 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 crushing debt. Consumers owed an average of $104,755 in mid-2025 – down slightly from $105,580 a year earlier – according to credit bureau Experian. (1) But the debt burden varies greatly by age.

Here is the distribution of the average balance by generation and the evolution compared to 2024:

• Generation Z: $34,328, +7.8%

• Millennials: $132,280, +1.6%

• Generation X: $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. Yet it’s no wonder that many households are turning to debt relief programs for help. But before you sign up, it’s crucial to understand how they work and whether you actually qualify.

Inflation and high interest rates have made it difficult for Americans to succeed. Rising prices for basic necessities like groceries and rent are forcing more people to consider credit as an option to cover everyday expenses.

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

Consolidation involves consolidating various debts into one payment plan to make things more manageable for consumers. This is achieved through a debt consolidation loan or credit card balance transfer. Costs may vary and debt-related fees may be triggered by 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 fees ranging from 15% to 25% of the listed debt. Consumers may benefit from comparing the potential savings to the actual cost.

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

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

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

Building a budget: Tracking every purchase you make can help you identify unnecessary spending so you can redirect that money toward paying off your debt.

Create an emergency fund: This is more of a preventative 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 hustle or part-time job can help you tackle high-interest debt more quickly.

If you’re on a debt relief program, think of it as a new beginning, not a finish line. Once your remaining balances are cleared, you may want to focus more on saving and avoiding new debt.

Debt relief can help you get out of a financial hole, but staying there takes planning and discipline. The key is to view the process as the first step in long-term financial recovery, not a shortcut to erasing debt that you’ll only rebuild later.

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Experienced (1); CBS News (2)

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