EY: Debt Relief Delivers Meaningful Savings for American Consumers

Consumer debt reached a sobering milestone last year, with credit card balances climbing to a staggering $1.28 trillion. Millions of Americans facing high costs, high interest rates and mounting debt need a realistic path to resolving what they owe. This week, EY and ACDR released the clearest, and most comprehensive study to date on how debt relief can provide that path.

EY’s analysis of the debt relief industry examines outcomes for approximately 54.1 million accounts enrolled in debt relief programs between 2016 and 2025. Based on these accounts, EY estimates the industry at large helped 8.1 million consumers settle more than $102 billion in debt, generating $29.3 billion in net savings to consumers

The study demonstrates how debt relief delivers real, meaningful savings for consumers struggling with unsecured debt and provides an effective option for reducing unsecured debt. For policymakers searching for solutions to a nationwide affordability crisis, the analysis provides evidence that the federally regulated debt relief process works for millions of Americans.

Why do consumers choose debt relief?

Affordability challenges, from the rising cost of living to the cost of gas and groceries, are increasingly pushing Americans toward using credit to make ends meet. More and more people have no choice but to carry high-interest, revolving balances.

Many debt relief consumers are often navigating major life events that result in expenses their regular paycheck or savings cannot cover. For example, an individual may have lost a job and, for months, could not pay off their credit card bills. Or a consumer may be battling serious illness as medical bills pile up, or need to take out a personal loan to pay for an unexpected emergency. These consumers have reached the point where they have no realistic ability to keep up with even minimum payments. For them, financial stability can only come from reducing the balance they owe, and debt relief provides exactly that.

The typical debt relief consumer enrolls $24,920 in unsecured debt spread across seven accounts. The report notes that most consumers have experienced significant credit damage before enrolling in a debt relief program. At the time of enrollment, the average consumer’s credit score has already fallen to 610, with 80 percent of debt relief clients falling in the “poor” or “fair” range prior to enrollment.

Usually, these consumers have been trying to pay off the debt on their own, but debt becomes overwhelming when high interest accrual makes it difficult or impossible to reduce the principal. EY considers a consumer with $3,600 in credit card debt at an 11% annual interest rate. If this consumer made only minimum payments, it would take nearly 12 years and cost $5,900 to repay that debt.

How does debt relief help financially distressed Americans?  

Debt relief clients make deposits into a dedicated savings account at an FDIC- or NCUA-insured bank or credit union. Meanwhile, a debt relief company negotiates with creditors on the consumer’s behalf to resolve enrolled debts for less than the full balance owed.

Upon settlement, debt relief produces significant reductions to the principal balance owed—30% on average. In contrast, credit counselors, for a fee, negotiate lower interest rates and work with creditors to waive past penalties, while debt consolidation loans combine debt into a single monthly payment. With both options, the consumer ends up with a plan for resolving their debt, but cannot reduce the principal balance owed and leave consumers repaying for longer.

Federal rules prohibit debt relief providers from charging an upfront fee. Providers only receive a fee when a settlement is reached, the consumer approves the settlement, and the consumer makes a payment on the settlement. That creates a model where debt relief companies win only when consumers win. Importantly, a consumer does not have to accept the negotiated settlement. If they decide to reject it, the consumer pays nothing to the debt relief company.

But, many clients do accept the settlements because they deliver real savings. Remember that consumer who spent nearly 12 years and $5,900 making minimum payments to resolve their credit card debt? With debt relief, they could resolve that debt in just four months for a total out-of-pocket cost of $2,590.

Looking across all their settled accounts, debt relief consumers realized average net savings of $6,370, or $2.50 in debt reduction for every $1 paid in fees.

Debt relief is not just a plan for getting caught up on payments, it is a structured path for zeroing out debt altogether.

How long does it take before consumers benefit from debt relief?

The EY study shows that consumers do not have to wait years, or settle every account, to begin seeing savings. In fact, because settlements occur account-by-account and fees are only charged on settled accounts, consumers achieve meaningful debt reduction with their first settlement just months after enrolling in a debt relief program. This means that consumers benefit even if they choose to leave a program after settling just one account.

Relief happens quickly.

The EY report also finds that among clients who reached a settlement, the typical client reached their first settlement within four months and 96 percent reached their first settlement within eight months. Subsequent settlements followed at regular intervals: a second at an average of eight months, a third at 11, a fourth at 14, and a fifth at 16 months after enrollment.

One of the main benefits of debt relief is that a consumer is not alone in their efforts to resolve their debt. Consumers come to debt relief with more than just delinquent credit card accounts, they come with the stress, shame, and exhaustion of trying—and failing—to resolve it. ACDR-accredited debt relief providers prioritize empathy, along with expertise and a proven path back to financial stability.

EY’s findings add important evidence to a simple reality: there is no single solution for every consumer facing financial distress. Debt relief is not the right fit for everyone, but for millions of consumers who have used it, the data show meaningful debt reduction and savings.

At a time when high-interest debt is putting pressure on household budgets, the report provides consumers and policymakers with a clearer, data-driven picture of where debt relief fits among the options available to people struggling with overwhelming unsecured debt.