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An Army veteran can repair a Humvee with his eyes closed but struggles with how to become debt free.

Question:  As an Army wheeled vehicle mechanic (91B), I thought I understood how to repair anything. But now that I’ve been a civilian for a couple of years, I realize I don’t know how to fix my credit.

I’ve been exploring my options but find myself having trouble distinguishing between “credit counseling,” “credit repair,” “credit monitoring,” “debt cancellation,” “debt forgiveness,” “debt settlement,” and a “debt management program.” Help!

— Jonathan, Colorado

Howard Dvorkin CPA answers…

Howard Dvorkin on debt optionsBefore I explain those confusing terms in plain English, Jonathan, I’ll remind you: As a veteran, you’re not alone. As someone who has offered financial counseling to veterans, I can tell you that many resources are available for those who served our nation. One of my favorites is Army OneSource.

Now, let’s answer your questions as succinctly as possible…

Credit counseling

This is a process you can use when you’re having problems with credit card debt. A certified professional will evaluate your debts and finances to help you identify the best debt options for your needs – which might be debt consolidation, debt management, or debt settlement.

Credit repair

This is how you take steps to correct mistakes on your credit report. Sometimes the reports (maintained by each of the three credit bureaus) contain errors that can drag down your credit score. With credit repair, you review your reports to identify mistakes and then dispute them with the credit bureaus to have the incorrect information removed.

Credit monitoring

This is a service you use to track changes in your credit. Your credit reports are monitored for changes or updates, so anytime something happens, you’ll be notified. It can be useful if you’ve faced issues with identity theft. You typically get your credit score, so you can build credit and increase your score and while watching your progress.

Debt consolidation

You roll multiple debts into one lower monthly payment at the lowest interest rate possible. There are really several different ways to consolidate, and the best one usually depends on your credit score. With a high credit score, you can consolidate on your own using a consolidation loan or balance transfer. If you have bad credit, you can consolidate through a credit counseling agency using a debt management program.

Debt cancellation

This is a little bit of a misnomer when it comes to credit card debt. No creditor will just cancel a credit card debt that you’ve incurred without some kind of credit damage or penalty. You can have the remaining payments on your debts canceled if you settle your debts for less than you owe or file bankruptcy, but both involve severe credit damage.

Debt forgiveness

Same thing here; your creditors won’t just “forgive” credit card debt once it’s incurred. They may discharge your remaining balances if you settle or declare bankruptcy, but that’s not forgiveness because you incur credit damage. Debt forgiveness actually applies to student loans, where your remaining balances can be forgiven after a certain number of payments if you’re employed in certain fields, like nursing or teaching.

Debt settlement

You pay your creditors a certain percentage of what you owe, and they agree to discharge the remaining balances. You pay less than the full amount owed to clear your debt, but you incur a 7-year credit penalty on every debt that’s settled. A settlement is usually a last-ditch effort before bankruptcy.

Debt management program

This is kind of like assisted debt consolidation. If you don’t have a high credit score, then consolidating on your own is tough (if not impossible). With a DMP, you consolidate through a credit counseling agency to roll all of your debts into one payment at the lowest interest rates possible. You can enjoy one low monthly payment even if you have bad credit.


Wow, right?

As I’ve always said, spending money is simple, but debt is complicated. If you want to talk to a professional about aby of this, you can fill out this form and get a free phone consultation from a service.

Good luck, Jonathan. If you can handle military service, you can handle this.

Have a debt question?

Email your question to and Howard Dvorkin will review it. Dvorkin is a  CPA, chairman of, and author of two personal finance books, Credit Hell: How to Dig Yourself Out of Debt and Power Up: Taking Charge of Your Financial Destiny.

Meet the Author

Howard Dvorkin, CPA

Howard Dvorkin, CPA

CPA and Chairman

Dvorkin is the author of Credit Hell and Power Up and Chairman of

credit counseling, debt consolidation

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