Nobody is going to write off your debt for you, and the people who say they will usually want money first.
If you are searching for how to write off debt, know this first: “write off” sounds like a button, and it is not. It is one of four different routes, each with its own bill, and the cheapest one is rarely the one with the loudest advert. Here is how to tell them apart before you sign anything.
Short answer: In the US, debt can be reduced or cleared four ways: a nonprofit debt management plan (lower rates, you repay in full), debt settlement (you repay part, and the forgiven part may be taxed), Chapter 13 bankruptcy (a 3 to 5 year court plan) and Chapter 7 bankruptcy (most unsecured debt cleared, with a $335 court fee). In the example below, $24,000 at 22% costs $19,654 in interest at $600 a month, against about $5,805 on a debt management plan.
Check where you stand first with the AI Debt Payoff Planner, then see our complete guide to paying off debt for the options that sit before any of these.
The four routes side by side
| Route | What happens to the debt | Typical length | Main risk |
|---|---|---|---|
| Debt management plan | You repay all of it, at lower rates the agency negotiates | 3 to 5 years | Cards in the plan must be closed; you need steady income |
| Debt settlement | You pay a lump sum or instalments, the creditor forgives the rest | Varies by company | Forgiven amount may be taxed; accounts go delinquent while you save |
| Chapter 13 bankruptcy | Court-approved plan repays part, the rest is discharged at the end | 3 years (below median income) up to 5 | Court fee $310 plus attorney; 7 years on your credit report |
| Chapter 7 bankruptcy | Most unsecured debt is discharged, usually within months | About 60 to 90 days after the creditors’ meeting date | Court fee $335 plus attorney; 10 years on your credit report; means test |
Sources: NerdWallet and NFCC (plans), FTC (settlement fees), U.S. Courts (Chapters 7 and 13), TransUnion, May 2026 (credit report timelines). Credit report periods run from the filing date.
Look at the last row. The court fee for Chapter 7 is small. The real price is the ten years it stays on your credit report, and the fact that it can only clear certain debts.
What the choice looks like in numbers
A made-up example: $24,000 of credit card debt at 22%, and $600 a month you can really afford. Payments run month by month, interest added each month.
| Route | Debt-free in | Interest and fees |
|---|---|---|
| Keep paying the cards | 73 months (6 years 1 month) | $19,654 |
| Debt management plan at 8% | 50 months | $5,805 (incl. $30 monthly fee and $40 to enroll) |
| Minimum payments only | About 32 years | $42,933 |
Our own calculation. Minimum assumed as interest plus 1% of the balance. The 8% plan rate and fees are illustrative, based on NerdWallet’s example of a 22% card cut to 8%; the NFCC says setup is up to $75 and monthly fees $25 to $50, so your agency’s quote will differ.
At that payment, the plan saves about $13,849 and 23 months. That is a real saving without any credit damage from a court filing. It is also why a counselor should be the first call, before a settlement company or a lawyer.
The tax bill nobody mentions
Settlement sounds like free money until the next April. Say a creditor accepts $14,400 on that $24,000. The $9,600 it forgives is generally treated as income by the IRS (IRS Topic 431). If you were in a 22% tax bracket, that is about $2,112 owed, on top of what you paid, unless you were insolvent (debts bigger than everything you own) or the debt was cleared in bankruptcy. The bracket is an assumption, so treat the $2,112 as a size check, not a quote.
The company running your settlement may also have charged a fee, and the FTC bars phone-based debt settlement firms from charging until they have settled a debt and you have made a payment (FTC). Walk away from anyone who wants money first. The consolidation, settlement and bankruptcy comparison covers how these stack up against a loan.
Which route fits which situation
- You can pay in full, just not at these rates. A debt management plan. Start with the NFCC, because the first session is free.
- You can’t realistically pay the balance but you have a lump sum or steady savings. Settlement, with the tax bill and the credit damage priced in first.
- You have regular income but fall behind on secured debts too. Chapter 13 is built for this, with 3 to 5 years to catch up.
- Your income is low, your assets are few and the debt is mostly cards and medical bills. Chapter 7 is the route designed for this.
If you have been sued or a collector is calling, read your rights first in our Know Your Rights tool. The order matters: a collector’s call is not a court judgment, and a judgment changes which options are open.
What it costs just to file
Court fees are small next to a lawyer’s bill but worth knowing. As listed by a US bankruptcy court, the filing fee is $338 for Chapter 7 and $313 for Chapter 13 (a joint petition from a married couple pays one fee). If you cannot pay in one go, the court can allow installments for Chapter 7, and a full waiver is possible if your income is below 150% of the federal poverty guidelines. Fees can change, so check your local bankruptcy court before you file.
Questions people ask at 2am
Can I just stop paying and wait for the debt to be written off?
No. Lenders do record a “charge-off”, which is bookkeeping that says they no longer expect to be paid. You still owe the money, the account can be sold to a collector, and you can be sued. See what stopping costs you in our Know Your Rights tool and in the Minimum Payment Trap Calculator, which shows how fast the balance grows if you only pay the minimum.
Do I need a lawyer to file Chapter 7?
The law does not require one. But the paperwork is long, and a mistake can get a case thrown out. Many bankruptcy attorneys offer a free first consultation, so book one before you decide. Ask for the full fee in writing, because the court fee is only part of the cost.
Will I lose my house or car?
It depends on your state’s protection rules, called exemptions, and on whether you are behind on the loans themselves. Chapter 13 is built for people who want to keep property while they catch up. This is the one question to put to a local bankruptcy attorney, not to a website.
Is forgiven debt really taxed?
Often, yes. The IRS says canceled debt is generally income for the year it happens (IRS Topic 431). Two exceptions can apply: debt canceled in bankruptcy, and debt canceled while you are insolvent, which means your debts are bigger than everything you own. Both are claimed on Form 982, so ask a tax preparer before you settle.
How do I spot a debt-relief scam?
Look at when they ask for money. Under the FTC’s rule, a debt settlement company selling by phone cannot charge a fee until it has settled at least one of your debts, you have agreed to the deal, and you have made a payment under it (FTC). Anyone asking for payment first, or promising to erase your debt, is a warning sign. Compare companies on our debt settlement companies page.
Does bankruptcy wipe out student loans?
Most government-backed student loans are not discharged. The federal courts list educational loans among the debts that generally survive Chapter 7 (U.S. Courts). Child support, alimony and certain taxes also survive. Credit cards, medical bills and personal loans are the usual targets.
Where do I even start tonight?
Run your real numbers in the AI Debt Payoff Planner. If the payoff date is more than five years away at a payment you can truly afford, book a free first session with a nonprofit counselor through the NFCC (877-360-6322). Bankruptcy also requires counseling from an approved agency within 180 days before filing, so you will likely need a session anyway.
How much does it cost to file for bankruptcy?
The court filing fee is $338 for Chapter 7 and $313 for Chapter 13, according to a US bankruptcy court’s fee page (effective December 2023). Lawyer fees are on top of that. Chapter 7 filers on a low income can ask to pay in installments or have the fee waived.
Disclaimer: DebtShift is an educational platform operated by H Ali Logistics Ltd. This article is general education, not financial, legal or tax advice, and bankruptcy and tax rules depend on your situation. If you are struggling with debt, a nonprofit credit counselor can help; find one through the National Foundation for Credit Counseling (nfcc.org) or call 877-360-6322.
Sources
- U.S. Courts, Chapter 7 bankruptcy basics
- U.S. Courts, Chapter 13 bankruptcy basics
- IRS Topic 431, Canceled debt (reviewed 24 Sep 2026)
- FTC, Debt relief rule press release (2010)
- TransUnion, How long bankruptcy stays on your report (May 2026)
- NerdWallet, Debt management plan comparison (Dec 2025)
- NFCC, Which debt repayment method is right for you
All payoff figures are our own month-by-month calculations from the assumptions stated above. The example is illustrative and not a real person.
Last reviewed October 2026
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