Think of Citizen Debt Relief as your financial mediator. They’re a U.S.-based company that specializes in helping people reduce their unsecured debts—credit cards, medical bills, personal loans, and those pesky store cards that somehow multiplied in your wallet.
Here’s the basic idea: instead of you paying your creditors directly, Citizen Debt Relief steps in and negotiates on your behalf. Their goal? To get your creditors to accept less than what you actually owe. Sounds pretty sweet, right?
The process typically works like this: You stop making payments to your creditors (yes, really) and instead deposit money into a special savings account each month. Once enough cash accumulates, Citizen Debt Relief uses those funds to make settlement offers to your creditors. If the creditor accepts—and many do—you pay the reduced amount, and boom, that debt is considered settled.
How Does the Whole Process Actually Work?
Let’s break this down step-by-step because understanding the mechanics is crucial before you sign anything.
Step 1: Free Consultation
You start with a no-obligation phone call where a debt specialist reviews your financial situation. They’ll ask about your income, expenses, and how much you owe. This is where they determine if you’re a good candidate for their program.
Step 2: Enrollment
If you qualify and decide to move forward, you’ll enroll in the program. At this point, you’ll stop making payments to your creditors (which feels terrifying but is part of the strategy). Instead, you’ll make monthly deposits into a dedicated savings account that you control.
Step 3: Negotiation
Once your account builds up enough funds, Citizen Debt Relief’s negotiators contact your creditors and make settlement offers. This could take several months. During this time, your phone might ring off the hook with collection calls—it’s uncomfortable, but it’s temporary.
Step 4: Settlement
When a creditor agrees to accept less than the full balance, you’ll be notified and asked to approve the settlement. Only after you approve and the creditor receives payment does Citizen Debt Relief collect their fee.
Step 5: Rinse and Repeat
This process continues until all your enrolled debts are settled, which typically takes 24 to 48 months.
What Types of Debt Can Actually Be Settled?
Not all debt is created equal, and not all debt can be negotiated. Citizen Debt Relief focuses exclusively on unsecured debt—the kind that isn’t backed by collateral.
This includes:
- Credit card debt (the big one)
- Medical bills
- Personal loans
- Collection accounts
- Store credit cards
- Some private student loans (though this is rare)
What they don’t handle:
- Mortgages
- Car loans
- Federal student loans
- Tax debt
- Child support or alimony
If you’re drowning in credit card debt, this program might be your golden ticket. If you’re behind on your mortgage? You’ll need a different solution.
The Big Question: Will This Trash My Credit Score?
Short answer: Yes, initially. Long answer: It’s complicated.
When you enroll in a debt settlement program, you stop paying your creditors directly. Those missed payments get reported to the credit bureaus, and your credit score takes a hit. We’re talking drops of 100 points or more, depending on your starting point.
But here’s the thing—if you’re already struggling to make minimum payments and considering bankruptcy, your credit is probably already suffering. The question becomes: Which path causes less long-term damage?
Once debts are settled, they’re typically reported as “settled” or “paid for less than owed” on your credit report. This isn’t as good as “paid in full,” but it’s definitely better than having accounts in collections or filing for bankruptcy.
Many people see their credit scores start to recover within 12 to 18 months after completing their program, especially if they practice good financial habits moving forward.
How Long Does This Whole Thing Take?
Patience is key here. Most people complete their debt relief program in 24 to 48 months—that’s two to four years. The timeline depends on several factors:
- How much debt you’ve enrolled
- How much you can afford to save monthly
- How quickly creditors agree to settlements
- How aggressive your creditors are
Some debts settle quickly (within 6-8 months), while others might take the full program length. The more you can save each month, the faster settlements happen.
Is Citizen Debt Relief Actually Legitimate?
Valid concern. The debt relief industry has its share of sketchy operators, so you’re smart to ask.
Citizen Debt Relief is a legally operating company that complies with Federal Trade Commission (FTC) regulations. By law, they cannot charge you any upfront fees—they only get paid after successfully settling at least one of your debts and you approve the settlement.
That said, always verify credentials. Check their standing with the Better Business Bureau (BBB) and read recent customer reviews. Look for complaints about hidden fees, aggressive sales tactics, or failure to deliver promised results.
Remember: A legitimate debt relief program should never pressure you to sign up immediately or guarantee specific outcomes. Creditors aren’t required to negotiate, so no company can promise exact savings amounts.
What’s This Going to Cost Me?
Here’s where things get interesting. Debt relief companies can’t charge upfront fees—that’s federal law. But they do charge fees once settlements are reached.
Typically, fees range from 15% to 25% of your enrolled debt amount. So if you enroll $30,000 in debt, you might pay $4,500 to $7,500 in fees over the life of the program.
But wait—before you freak out about those numbers, consider this: If Citizen Debt Relief successfully negotiates your debts down by 40-50% (which is common), you’re still coming out ahead significantly.
Let’s do quick math:
- Original debt: $30,000
- Negotiated down to: $18,000 (40% reduction)
- Service fees: $6,000 (20% of enrolled debt)
- Total you actually pay: $24,000
- Total savings: $6,000
Not too shabby. Plus, you’re making one manageable monthly payment instead of juggling multiple high-interest accounts.
Can I Still Use My Credit Cards While Enrolled?
Nope. Once you enroll, you’ll need to stop using the credit cards included in the program. The accounts get frozen, and you won’t be adding new charges.
This is actually a good thing (though it doesn’t feel like it at first). It forces you to break the cycle of accumulating new debt while trying to pay off old debt. You’ll need to operate on a cash or debit-only basis, which—let’s be honest—is probably what got you here in the first place.
Many people find this transition challenging but ultimately liberating. Living within your means becomes non-negotiable, and you develop better spending habits along the way.
Debt Relief vs. Bankruptcy: Which Is Better?
This is the million-dollar question (or, you know, the $30,000 question in many cases).
Bankruptcy is the nuclear option. It wipes out most unsecured debts, but it obliterates your credit for 7-10 years and becomes part of your permanent public record. It can affect your ability to rent apartments, get jobs (in certain industries), and secure loans.
Debt relief is less severe. Yes, your credit takes a hit, but it’s typically less damaging and recovers faster than bankruptcy. You’re also avoiding the legal complications and stigma that come with filing for bankruptcy.
That said, bankruptcy might be the better choice if:
- Your debt is truly overwhelming (six figures or more)
- You have little to no income
- You’re facing lawsuits or wage garnishment
- You need immediate relief from collection actions
For moderate debt levels ($10,000-$50,000) with steady income, debt relief often makes more sense. It’s worth consulting with both a debt relief specialist and a bankruptcy attorney to understand your options fully.
Who Actually Qualifies for This?
Not everyone is a good candidate for debt settlement. You’ll typically qualify if you:
- Have at least $10,000 in unsecured debt (some companies require $7,500 minimum)
- Are currently struggling to make minimum payments
- Have a steady income source to fund monthly deposits
- Are experiencing genuine financial hardship
- Are not currently in bankruptcy proceedings
If you’re comfortably making payments and just want to reduce interest rates, you might be better off with debt consolidation or a balance transfer credit card instead.
Will Creditors Stop Calling Me?
Eventually, yes. Initially, no.
When you first stop making payments, expect your phone to blow up. Creditors will call frequently, trying to collect what you owe. It’s annoying, stressful, and honestly, one of the worst parts of the process.
However, as negotiations progress and settlements are reached, those calls diminish significantly. Once a debt is settled, that creditor has no reason to contact you anymore.
Pro tip: You can send creditors a written request asking them to only contact you in writing or through your debt relief company. Under the Fair Debt Collection Practices Act, they must honor this request (though your original creditors aren’t technically bound by the FDCPA, third-party collectors are).
Is My Personal Information Safe?
Any legitimate debt relief company should have strict privacy and confidentiality policies. Your financial information should never be shared with third parties without your explicit consent.
That said, do your homework. Read the company’s privacy policy before enrolling. Look for:
- Encryption of sensitive data
- Clear policies about who has access to your information
- Compliance with federal privacy laws
- Transparent data retention policies
If a company seems sketchy about their privacy practices, walk away. Your financial data is too important to trust to shady operators.
Can I Bail Out If It’s Not Working?
Absolutely. You can cancel your enrollment at any time without penalty. This is actually a consumer protection built into the industry regulations.
If you cancel, any money sitting in your dedicated savings account belongs to you—you get it back, minus any fees for settlements that have already been completed and accepted.
This flexibility is important because life happens. Maybe you get a better job and can suddenly afford to pay your debts normally. Maybe you decide bankruptcy is the better route after all. Whatever your reason, you’re not locked in.
How Do I Actually Get Started?
Ready to take the plunge? Here’s your action plan:
- Schedule a free consultation
Most companies, including Citizen Debt Relief, offer no-obligation consultations. This is your chance to ask questions, understand the process, and get a realistic assessment of your situation. - Gather your financial documents
Before your consultation, collect information about all your debts: creditor names, account numbers, balances, interest rates, and minimum payments. Also know your monthly income and essential expenses. - Ask the tough questions
Don’t be shy. Ask about fees, timelines, success rates, and what happens if creditors refuse to settle. A reputable company will answer honestly. - Compare your options
Don’t commit to the first company you talk to. Consult with 2-3 different debt relief companies, and also talk to a credit counselor about alternatives like debt management plans. - Read the fine print
Before signing anything, read every word of the enrollment agreement. Understand the fee structure, your obligations, and the company’s responsibilities. - Commit to the process
If you decide to move forward, commit fully. Make your monthly deposits on time, respond to communications promptly, and review settlement offers carefully before approving them.
Alternative Routes: What If Debt Relief Isn’t Right?
Debt settlement isn’t for everyone. Here are some alternatives worth considering:
Debt Consolidation Loans
If your credit is still decent, you might qualify for a personal loan with a lower interest rate than your credit cards. You use the loan to pay off your high-interest debts, leaving you with one manageable monthly payment. Check out options for debt consolidation to see if this fits your situation.
Balance Transfer Credit Cards
Some cards offer 0% APR for 12-21 months on balance transfers. If you can pay off your debt within the promotional period, you’ll save a fortune on interest. Just watch out for balance transfer fees (typically 3-5%).
Credit Counseling and Debt Management Plans
Nonprofit credit counseling agencies can help you create a debt management plan, where they negotiate lower interest rates with your creditors (but not lower principal balances). You make one monthly payment to the agency, and they distribute it to your creditors.
DIY Debt Negotiation
Feel confident? You can negotiate with creditors yourself. It takes persistence and thick skin, but it’s free. Just be prepared for lots of phone calls and potential rejection.
Bankruptcy
If your debt is truly unmanageable and you have little income, bankruptcy might be your best option. It’s not the end of the world—millions of Americans file each year and successfully rebuild their financial lives.
The Real Talk: Pros and Cons
Let’s lay it all out on the table, no sugar-coating.
Pros of Citizen Debt Relief:
- Potentially reduce your total debt by 40-50% or more
- One manageable monthly payment instead of juggling multiple bills
- No upfront fees—you only pay after successful settlements
- Avoid the long-term consequences of bankruptcy
- Professional negotiators handle the tough conversations with creditors
- Typically faster than making minimum payments for decades
- You maintain control of your settlement account
Cons of Citizen Debt Relief:
- Your credit score will take a significant hit initially
- Collection calls increase in the early months
- No guarantee that all creditors will agree to settle
- You could face tax consequences (forgiven debt over $600 may be considered taxable income)
- Fees can add up to thousands of dollars
- Takes 2-4 years to complete
- You can’t use enrolled credit accounts during the program
- Risk of lawsuits from creditors who refuse to negotiate
Common Mistakes to Avoid
People screw this up in predictable ways. Don’t be one of them:
Mistake #1: Not having realistic expectations
Debt relief isn’t magic. It won’t fix your problems overnight, and it definitely won’t be painless. Prepare for a long haul with some uncomfortable moments.
Mistake #2: Continuing to use credit
If you keep racking up new debt while trying to settle old debt, you’re just rearranging deck chairs on the Titanic. Break the cycle.
Mistake #3: Missing deposit payments
Consistency is everything. If you can’t make your monthly deposits, settlements can’t happen. Treat this payment like your rent or mortgage—non-negotiable.
Mistake #4: Ignoring tax implications
Forgiven debt over $600 is typically considered taxable income by the IRS. You might owe taxes on the amount saved. Consult a tax professional before enrolling.
Mistake #5: Falling for scams
If it sounds too good to be true, it probably is. Legitimate companies never guarantee specific savings amounts or charge upfront fees.
Mistake #6: Not reading the fine print
You’re signing a contract. Read it. Understand it. Ask questions about anything that’s unclear.
What Happens After You’re Debt-Free?
Completing a debt relief program is a huge accomplishment, but it’s not the finish line—it’s a new starting line.
Here’s what life looks like on the other side:
Your credit will start recovering
As settled accounts age and you build positive payment history (if you have other accounts), your credit score gradually improves. Most people see significant recovery within 2-3 years post-program.
You’ll need to rebuild
Consider getting a secured credit card to rebuild credit. These require a deposit that becomes your credit limit. Use it sparingly and pay it off monthly.
Practice better money habits
The habits you developed during the program—living on a budget, avoiding unnecessary debt, saving regularly—need to stick. Otherwise, you risk ending up right back where you started. Learning how to avoid debt in the future is crucial.
Build an emergency fund
One of the biggest reasons people get trapped in debt is lacking emergency savings. When unexpected expenses hit, they have no choice but to charge them. Break this cycle by building a cushion of 3-6 months’ expenses.
Celebrate your wins
Seriously. You did something really hard. Acknowledge your progress and use it as motivation to keep making smart financial choices.
The Bottom Line: Is Citizen Debt Relief Worth It?
Here’s the honest truth: Citizen Debt Relief and similar programs work well for some people and are a disaster for others.
It’s worth considering if:
- You’re drowning in $10,000+ of unsecured debt
- You’re struggling to make minimum payments
- You want to avoid bankruptcy
- You have steady income to make program deposits
- You can handle temporary credit score damage
- You’re committed to stopping the debt cycle
It’s probably not right if:
- Your debt is manageable with better budgeting
- You can qualify for low-interest consolidation loans
- Your primary debt is secured (mortgage, car loans)
- You don’t have steady income
- You’re judgment-proof (no assets or income to collect)
- You can’t stomach months of collection calls
The decision ultimately comes down to your specific circumstances, your tolerance for short-term pain, and your commitment to long-term financial health.
Take Action Today
Still reading? Good. That means you’re serious about getting your financial life back on track.
Here’s what to do next:
Step 1: Schedule consultations with 2-3 debt relief companies. Compare their offerings, fee structures, and your gut feeling about their professionalism.
Step 2: Talk to a nonprofit credit counselor. They can provide an objective assessment and might suggest alternatives you haven’t considered.
Step 3: Create a realistic budget. Use our paycheck budget guide to see exactly where your money goes each month.
Step 4: Decide whether debt relief is a good idea for your specific situation.
Step 5: If you move forward, commit 100%. Half-measures won’t cut it.
Remember: Your current financial situation isn’t your permanent reality. With the right plan and enough determination, you can dig yourself out of this hole and build a stable financial future.
Don’t let debt define your life. Take control, make a plan, and execute it. Your future self will thank you.
Looking for more financial guidance? Visit Wealthopedia for expert advice on managing debt, building wealth, and achieving financial freedom.
