US consumers crippled by $105K 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 as of mid-2025 — down slightly from $105,580 a year earlier — according to credit bureau Experian. (1) But debt burdens vary sharply by age.

Here’s the average balance breakdown by generation, and the change from 2024:

• Gen Z: $34,328, +7.8%

• Millennials: $132,280, +1.6%

• Gen 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. Still, it’s no wonder many households are turning to debt relief programs for help. But before you sign up for one, 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 get ahead. Rising prices for essentials like groceries and rent are forcing more people to view credit as an option to cover everyday expenses.

Debt relief programs can come in several forms, such as consolidation, settlement and credit counseling.

Consolidation involves rolling various debts into a single payment plan to make things more manageable for consumers. This is achieved through a debt consolidation loan or credit card balance transfer. Costs can vary and fees attached to the debt may be triggered by consolidation, according to CBS News. (2) Be careful to read the fine print if you choose this path.

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Debt settlement companies negotiate with creditors and attempt to reduce the amount you owe. In exchange, they may charge a fee of 15% to 25% of the enrolled debt. Consumers may be wise to weigh the potential savings against the true cost.

A credit counselor can assess your financial situation, provide advice and may negotiate lower interest rates with creditors. While there are nonprofit agencies that typically charge nominal fees or work on a sliding scale, beware 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 any tax implications. For example, forgiven debt may be considered taxable by the IRS.

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

Build a budget: Track every single purchase you make can help you identify unnecessary expenses so you can redirect that money toward paying down debt.

Set up an emergency fund: This is more of a preventative measure. Give yourself a financial cushion to protect against unexpected expenses that might plunge 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 attack high-interest debt faster.

If you do go through a debt relief program, consider it a fresh start, not a finish line. Once your remaining balances are cleared, you may want to shift focus to prioritize saving and avoid new debt.

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

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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.