* This article does not provide financial advice. Please seek help from a financial advisor if you need financial assistance.
(Ad) If you find yourself struggling to pay bills and unable to keep up with debt payments, working with the best debt settlement companies can offer a way out.
The best debt relief companies work with your creditors or lenders on your behalf to settle your debt for less than what you owe. Whether you have credit card debt, medical bills, IRS debt, or other types of unsecured debts, there are a variety of debt relief programs that can help get your finances on the right track.
We’ve reviewed the best debt relief companies to help you find a reliable company that is trustworthy and affordable. We evaluated each company below on a variety of factors including accreditation, minimum debt required, user reviews, and fees.
Best Debt Settlement Companies
- Freedom Debt Relief: Best debt relief company overall
- National Debt Relief: Best for credit card debt relief
- Accredited Debt Relief: Best for debt consolidation
- Community Tax: Best for tax debt relief
- New Era Debt Solutions: Best for debt relief from payday loans
#1. Freedom Debt Relief: Best Debt Settlement Company Overall
Freedom Debt Relief is one of the best debt relief companies in the industry with more than 650,000 clients and over $10 billion in debt resolved since 2002. In fact, many clients wind up paying 50% or less of the amounts they owe.
Based in California, Freedom Debt Relief is the largest debt settlement company in the United States, currently employing over 2,000 highly trained professionals. Freedom Debt Relief is accredited by both the American Fair Credit Council and the International Association of Professional Debt Arbitrators and has earned a B rating from the Better Business Bureau.
Adept at settling private unsecured debts, Freedom Debt Relief can settle debts from credit cards, medical bills, and certain student loans.
When you sign up with Freedom Debt Relief, you’ll receive a free consultation with a certified debt relief specialist who will discuss your financial situation with you. The consultant will then create a debt settlement plan that’s tailored to you and ask you to save a specific amount for the settlement in a separate account.
One feature that makes Freedom Debt Relief one of the best debt settlement companies around is its interactive interface. When you start making deposits, you’ll get access to a client dashboard that you can use to track your progress. In addition to how much of a dent you’ve made in your debt, you’ll see any progress the company has made negotiating with creditors on your behalf.
Like all reputable debt settlement companies, Freedom Debt Relief doesn’t charge any upfront fees. You’ll pay 15% to 25% of the settled amount.
If you’re struggling with crushing debt, Freedom Debt Relief could be your salvation. As long as you have a minimum debt of $7,500, you will qualify for its program and be on your way to relief.
Pros
- Over $10 billion in debts settled since 2002
- No upfront fees for their debt relief program
- Settle debts for a fraction of what you owe
- Online dashboard so you can monitor progress 24/7
- Variety of debt management plans available
- Accredited by the American Fair Credit Counsel
- A+ BBB rating
Cons
- Must have at least $7,500 in total enrolled debt to qualify
- No live chat option for customer support
#2. National Debt Relief: Best for Credit Card Debt Relief
National Debt Relief is our top pick for the best debt relief service of 2023. National Debt Relief was founded in New York in 2009. Since then, National Debt Relief has become one of the largest and most respected debt settlement companies in the nation with accreditations from the American Fair Credit Council and the International Association of Professional Debt Arbitrators as well as an impressive A+ BBB rating.
In line with its mission of helping clients reduce their unsecured debt, National Debt Relief has a track record for settling many clients’ debts for just 30% of their total debt. The company is also known for its overall transparency, outstanding customer service, and money-back guarantee.
National Debt Relief provides a wide array of debt settlement services, including business debt, credit cards, lines of credit, medical bills, personal loans, and student debt. However, the company does not handle mortgage loans and back taxes.
Enrolling in one of the National Debt Relief programs is easy; you can sign up over the phone. Next, you’ll receive a free consultation with one of the company’s debt counselors. After discussing your situation and determining a solution, you’ll set aside a specific amount of money in a dedicated account each month. You will use this money to settle your debts for less than what you owe.
In the meantime, the company will help coordinate your efforts and negotiate with creditors on your behalf.
National Debt Relief won’t charge you anything until it succeeds in reducing your debt. When your consultant reaches a debt settlement with your creditors at some point within the next 24 to 48 months, you’ll pay the company 15% to 25% of the enrolled debt. And if you don’t like your results, you can ask for a refund.
If you’re looking to enroll in a debt relief program and have a minimum debt of $7,500, you’ll qualify for National Debt Relief. The company is fully equipped to help you get your finances back on track.
Pros
- Ranked as the best debt settlement company by many independent review sites
- Settle your unsecured debt for less than what you owe
- A+ BBB Rating
- Types of debt resolved include credit cards, medical, business, and loans
- Free consultation with a certified debt relief specialist
- No upfront service fees
Cons
- Minimum of $10k in total enrolled debt
- Doesn’t accept clients in 8 states
#3. Accredited Debt Relief: Best for Debt Consolidation
Accredited Debt Relief is one of the best debt relief companies based on their proven track record, outstanding reputation, and personalized debt relief programs. This debt relief company has over 140,000 active clients and has had more than $3.5 billion in debt enrolled since 2011.
Accredited Debt Relief is based in San Diego and has A+ accreditation with the Better Business Bureau. Their goal is to help you resolve your debts as quickly as possible and negotiate settlements with your creditors for less than what you owe.
Accredited Debt Relief can reduce the amount of debt you owe by up to 50%, consolidate multiple payments into one payment, and help you become debt free in as little as 12 months.
To get started with Accredited Debt Relief, you can call or fill out their online form to receive a free, no-obligation consultation. One of their debt relief experts will work with you to create a personalized debt relief program based on your goals, amount of debt, and your budget.
If the specialist deems you a good candidate for debt settlement, you’ll open your own dedicated savings account insured by the Federal Deposit Insurance Corporation. Sometimes called an “escrow” or “settlement” account, this is where you will send your monthly deposits that go towards paying off your debt.
From there, Accredited Debt Relief will negotiate with the creditors on your behalf so that they’ll agree to a debt settlement considerably less than what you originally owed. But if you’re not satisfied with the company’s efforts, you can cancel the program and get your money back at any time. There are no upfront fees to get started.
Accredited Debt Relief specializes in unsecured debt, which is defined as debt without collateral attached to them. Examples of unsecured debt include high-interest credit card debt, medical bills, and payday loans.
If you're looking for an experienced debt relief company with an impeccable reputation, fast results, and a money back guarantee, Accredited Debt Relief should be near the top of your list.
Pros
- Over 20 years of experience in the debt relief industry
- Best for unsecured debts such as credit card debt
- Negotiates with your creditors to settle your total debt for less than what you owe
- Fast and easy debt relief process
- The best debt relief programs from 12-48 months
- A+ BBB Rating
- Free consultation with debt relief expert
Cons
- Minimum debt requirement is $10,000
- Pricing information not available on website
#4. Community Tax: Best for Tax Debt Relief
Community tax is the best tax relief company in the industry, with over $800 million tax debt resolved for their clients.
How It Works
Step 1: Consultation: At Community Tax, their team of experienced professionals will carefully assess your case and offer a free tax analysis, outlining the most suitable resolutions to address your tax liability.
Step 2: Investigation: To initiate the investigation process, Community Tax will file a Tax Authorization Information Form 8821 with the IRS and/or the relevant form with the State Taxing authority on your behalf. This step is crucial in obtaining a comprehensive record of your account. Once the process is complete, they will promptly reach out to you to discuss the most effective and suitable approach to address the tax issue at hand.
Step 3: Resolution: During the resolution phase of our process, Community Tax takes a deeper dive into your financial information and documentation to prepare a comprehensive proposal for submission to the IRS and/or State. Their dedicated team is committed to assisting you throughout this process, aiming not only to resolve your current tax issues but also to ensure you remain tax debt-free in the future.
Key Features
Here’s what we like most about Community Tax:
1. Free Initial Consultation: Community Tax offers a free, no-obligation consultation with experienced tax professionals. During this consultation, clients can discuss their tax issues and explore potential solutions without incurring any costs.
2. Personalized Tax Analysis: The company provides a personalized tax analysis, where their team carefully assesses each client's tax situation. This analysis helps identify the best potential resolutions for the individual's specific tax liability.
3. Experienced Tax Professionals: Community Tax boasts a team of experienced tax professionals, including enrolled agents, tax attorneys, and CPAs. These experts offer expert guidance and representation throughout the tax resolution process.
4. Comprehensive Tax Relief Services: The tax relief program offers a wide range of services, including tax debt resolution, IRS tax lien and levy assistance, penalty abatement, installment agreements, and more. This ensures clients have access to various solutions for their tax challenges.
5. Service Guarantee: Clients of Community Tax enjoy a service guarantee. If the company determines that it cannot help resolve a client's tax debts, they will refund the investigation fee.
6. Transparent Approach: Throughout the tax relief process, Community Tax maintains a transparent and supportive approach. Clients are kept informed at every stage, and the company ensures clarity in its cost structure.
7. Positive Ratings and Reviews: Community Tax has received positive ratings and reviews from clients on platforms such as Trustpilot. This reflects the company's dedication to customer satisfaction and the effectiveness of their tax relief services.
8. Team of Experts: Community Tax's team includes not only tax professionals but also tax attorneys, licensed professionals, and other experts. This ensures that clients have access to a diverse skill set when addressing their tax issues.
#5. New Era Debt Solutions: Top Rated Debt Resolution Company with No Upfront Fees
New Era Debt Solutions is a leading debt settlement company dedicated to helping individuals significantly reduce their debt burden and achieve a debt-free life. Since 1999, New Era Debt Solutions has successfully settled more than $250,000,000 in debt for their clients.
Reviews and Accreditation
New Era Debt Solutions has received positive ratings and reviews from various independent review sites, including the Better Business Bureau (BBB), where they hold an A+ rating. The company is also a member of the American Fair Credit Council (AFCC), signifying its commitment to ethical practices in the debt relief industry. Additionally, New Era Debt Solutions has a 4.9 star rating on Trustpilot with over 300 positive reviews.
How It Works
New Era Debt Solutions offers debt settlement services to individuals struggling with unsecured debts. The process starts with a free consultation where their debt specialists assess the client's financial situation. If debt settlement is a suitable option, the client enrolls in the program and starts making monthly deposits into a dedicated account. The company then negotiates with creditors to reach settlements for less than the full amount owed.
Key Features
- Free Consultation: New Era Debt Solutions provides a no-obligation consultation to evaluate if debt settlement is the right fit for the individual's needs.
- Customized Debt Settlement Plans: The company tailors its debt settlement programs to each client's specific financial situation and debt load.
- Experienced Negotiators: New Era Debt Solutions employs experienced negotiators to work with creditors on behalf of clients, aiming for favorable settlement outcomes.
- Transparent Fees: The company discloses its fees upfront, providing clients with a clear understanding of the cost structure.
- Online Dashboard: Clients can access a user-friendly online portal to track the progress of their settlements and account balances.
On average, clients of New Era Debt Solutions complete their debt relief program in 28 months. While the company doesn't specify a minimum qualifying debt amount for enrollment, it highlights on its website that negotiations with creditors typically commence after six to 12 months of funds accumulation in a dedicated savings account. This approach allows clients to build up adequate funds before starting the negotiation process for favorable debt settlements.
You have two options to begin with New Era's debt settlement services: you can either get started online or call for a complimentary debt analysis. However, it's important to note that New Era doesn't operate in three states: Iowa, Maine, and Oregon.
What is a Debt Settlement Company?
A debt settlement company is a type of financial service provider that offers to negotiate with creditors on behalf of individuals or businesses struggling with significant debt. The primary goal of a debt settlement company is to reduce the total amount of unsecured debt owed by negotiating with creditors to accept a lump-sum payment that is less than the full amount owed. This can be an attractive option for people facing financial hardships and unable to manage their debt payments.
The process typically involves the debtor making regular payments to a designated account set up by the debt settlement company. As funds accumulate in the account, the company will negotiate with creditors to settle the debts for a reduced amount. Once an agreement is reached, the debtor pays the agreed-upon settlement amount to the creditor, and the debt is considered resolved.
How Does Debt Settlement Work?
Debt settlement programs are debt relief options designed to help individuals and businesses struggling with overwhelming debt. A debt relief program aims to negotiate with creditors to settle debts for less than the full amount owed. Here's how debt settlement programs typically work:
- Financial Assessment: The debt relief program begins with a thorough assessment of the individual's financial situation. A debt settlement company or credit counselor reviews the person's debts, income, expenses, and overall financial picture to determine the most suitable debt relief approach.
- Enrollment in the Program: If debt settlement is deemed appropriate, the individual enrolls in the debt settlement program. The debt settlement company may require the individual to stop making payments to creditors temporarily and instead make payments into a designated savings or trust account.
- Accumulation of Funds: Over time, the individual makes regular deposits into the savings or trust account. These funds accumulate, and the goal is to build up a pool of money to be used for potential settlements with creditors.
- Negotiation with Creditors: Once enough funds have accumulated in the savings account, the debt settlement company begins negotiating with the individual's creditors. They communicate with creditors or collection agencies on behalf of the debtor, aiming to secure settlements for less than the total debt amount.
- Settlement Offers: The debt settlement company presents settlement offers to creditors, proposing to pay a lump sum or agreed-upon amount to settle the debt. Creditors may accept the settlement offer if they believe it's the best option to recover some of the owed money.
- Resolution of Debts: If the creditors accept the settlement offers, the debt settlement company uses the accumulated funds to pay off the settled debts. The individual's debts are considered resolved, and they are no longer responsible for the remaining balances.
- Completion of the Program: The debt settlement program concludes when all enrolled debts are settled. The individual should receive documentation confirming that the debts are paid in full or settled, which they can retain for their records.
- Credit Impact: It's important to note that debt settlement can have a negative impact on the individual's credit score. Since debts are settled for less than the full amount, creditors may report the accounts as "settled" or "charged-off," which can lower the credit score.
Debt settlement programs can offer relief to individuals who are struggling to manage their debts, especially when other debt relief options may not be feasible. However, it's essential to understand the potential risks and consequences of debt settlement, including its impact on credit scores and possible tax implications. Before enrolling in a debt settlement program, individuals should thoroughly research their options, consider alternatives, and consult with a financial advisor or credit counselor to make an informed decision.
How to Choose The Best Debt Relief Companies
Choosing the best debt relief company is a critical decision that can significantly impact your financial future. To ensure you select a reputable and reliable debt relief company, consider the following steps:
Research and Compare Companies
Take the time to research and compare several of the leading debt relief companies. Look for debt settlement companies with a proven track record of success in helping clients settle their debts or manage their financial situation effectively. Reading online reviews and testimonials from previous customers can provide valuable insights into the company's reputation and the experiences of others.
Check Accreditations
The top debt relief companies often hold accreditations or memberships with industry organizations like the American Fair Credit Council (AFCC) or the International Association of Professional Debt Arbitrators (IAPDA). These affiliations demonstrate the company's commitment to maintaining high ethical standards and following best practices within the debt relief industry.
Review Fees and Costs
Understand the fee structure of the debt relief company. Avoid debt settlement companies that charge large upfront fees before settling your debts, as this can be a red flag. Look for debt relief companies that charge fees based on their performance, meaning they only earn fees when they successfully settle your debts or provide the agreed-upon services.
Free Consultation
The best debt relief companies often offer a free consultation to assess your financial situation and recommend appropriate solutions. During this consultation, you can ask questions about their debt relief services, the process they follow, and the potential impact on your credit score.
Transparency and Disclosure
A trustworthy debt relief company should be transparent about its services and the potential risks involved. The best debt settlement companies should disclose all fees, possible outcomes, and any potential impact on your credit score. Avoid debt relief companies that make unrealistic promises or downplay the risks associated with their programs.
Customer Service
Effective communication and excellent customer service are crucial when selecting the best debt settlement companies. Choose a debt settlement company that is responsive to your inquiries, provides regular updates on your progress, and addresses any concerns you may have promptly and professionally.
No One-Size-Fits-All Solutions
Each person's financial situation is unique, and there is no one-size-fits-all solution for debt relief. Avoid debt negotiation services that offer generic debt relief programs without taking the time to understand your specific financial challenges and tailor their services accordingly.
Remember that no debt relief company can guarantee specific results, and debt relief programs may have varying impacts on your credit score and financial situation. It's essential to consider all your debt relief options, including debt consolidation, credit counseling, and negotiation with creditors, before making a decision. Seeking advice from a financial advisor or credit counselor can also help you make an informed choice.
Pros and Cons of Debt Settlement
Debt settlement companies can offer a potential solution for individuals facing overwhelming debt, but they also come with their own set of pros and cons. Let's explore them:
Pros of Debt Settlement
- Debt Reduction: The most significant advantage of debt settlement companies is their ability to negotiate with creditors to lower the outstanding balance of your debts. This reduction can range from a percentage of the original debt to a substantial decrease, potentially making it more manageable to pay off.
- Single Monthly Payment: Debt settlement companies typically consolidate your debts into a single monthly payment. This streamlines your financial obligations and can make it easier to budget and manage your payments.
- Professional Negotiation: Debt settlement companies have experience dealing with creditors and collection agencies. They know the tactics to employ when negotiating, potentially leading to more successful settlements than if you were negotiating on your own.
- Quicker Debt Resolution: Compared to making minimum payments, which can take many years to clear the debts, debt settlement can offer a faster path to becoming debt-free. Once a settlement is reached, you can resolve the debt relatively quickly, depending on the terms.
- Reduced Stress: By enlisting the help of a debt settlement company, you can offload the burden of dealing with creditors and collection calls. This can provide relief from the stress and anxiety that often accompany overwhelming debt.
Cons of Debt Settlement
- Impact on Credit Score: Debt settlement can negatively impact your credit score. When debts are settled for less than the full amount, creditors may report the accounts as "settled" or "charged-off," which can lower your credit score. The impact may remain on your credit report for several years.
- Fees and Costs: The top debt settlement companies typically charge fees for their services, which can vary widely. Some companies charge a percentage of the settled debt, while others charge a flat fee or an upfront fee. These fees can add to the overall cost of the debt settlement program.
- No Guarantee of Success: Debt settlement companies cannot guarantee that all creditors will agree to settle debts. Some creditors may refuse to negotiate or may hold out for the full amount owed, leaving you with unresolved debts.
- Potential Lawsuits and Collection Activity: While the debt settlement process is ongoing, creditors may still pursue legal action or engage in aggressive collection activity, including phone calls and letters.
- Tax Implications: Debt forgiven through settlement may be considered taxable income by the IRS. You may receive a Form 1099-C for the forgiven amount, potentially leading to a tax liability.
- Scams and Unethical Practices: The debt relief industry has seen its share of scams and unethical practices. Some companies may make false promises or engage in deceptive practices, preying on vulnerable individuals seeking debt relief.
- Long-Term Impact: Debt settlement may not address the underlying financial habits or issues that led to the debt problem in the first place. Without addressing these root causes, there's a risk of falling back into debt after completing the settlement program.
Other Considerations
Before choosing debt settlement, it's crucial to thoroughly understand the pros and cons and consider other debt relief options available. Debt consolidation, credit counseling, and debt management plans are alternative approaches that may better suit your financial situation. Consulting with a financial advisor or credit counselor can help you assess your unique circumstances and determine the most appropriate strategy to manage and eliminate your debt effectively. Additionally, when selecting a reputable debt settlement company to get out of debt faster, it's essential to research and choose a reputable, transparent, and compliant company to avoid potential pitfalls and scams.
What Types of Debt Can Debt Relief Companies Help With?
Debt settlement companies primarily focus on helping individuals with unsecured debts. Unsecured debts are those not tied to any specific asset or collateral, such as personal credit card debt. Some of the common types of unsecured debt that the top debt relief companies can assist with include:
- Credit Card Debt: Credit card debt is one of the most common types of debt that people seek assistance with from debt settlement companies. Credit card debt can accumulate due to high interest rates and can be challenging to manage, leading individuals to explore debt settlement as an option.
- Personal Loans: Unsecured personal loans, often obtained from banks, online lenders, or peer-to-peer lending platforms, can also be eligible for a debt settlement agreement.
- Medical Bills: Medical expenses can quickly add up, leaving individuals struggling to pay off their medical debts. A debt settlement service may negotiate with medical providers or collection agencies to lower the outstanding balances.
- Private Student Loans: While federal student loans typically don't qualify for debt settlement, some of the premier debt settlement agencies may work with borrowers who have private student loans. However, settling student loans can be more complex and less common than other types of debts.
- Collections and Charge-Offs: If debts have been charged-off or sent to collections, debt settlement companies may negotiate with the collections agencies on your behalf to settle the debt for a reduced amount.
It's important to note that debt settlement companies generally do not work with secured debts, such as mortgages and auto loans. Secured debts are tied to specific assets (e.g., a house or a car), and debt settlement is typically not applicable to these types of debts.
Moreover, debt settlement companies might not be able to assist with certain types of debts that arise from specific situations, such as unpaid taxes, child support, alimony, or court-ordered fines and penalties.
Alternatives to Debt Settlement Companies
There are several alternatives to debt relief companies that individuals can consider when seeking assistance with their debt management. These alternatives may suit different financial situations and goals. Some common alternatives include:
Self-Negotiation with Creditors
Taking the initiative to negotiate directly with creditors is an option for individuals who feel comfortable discussing their financial situation. By explaining their hardship and proposing a repayment plan, some creditors may offer temporary relief or more manageable terms to help the individual pay off the debt.
Debt Consolidation Loans
A debt consolidation loan involves taking out a new loan to pay off multiple existing debts, effectively combining them into a single loan. This can simplify the repayment process and potentially lower the overall interest rate, making it easier to manage the debt. However, it's essential to ensure the new loan offers better terms than the existing debts.
Credit Counseling
Non-profit credit counseling agencies provide free or low-cost counseling services to help individuals assess their financial situation and develop a plan to manage their debts effectively. Credit counselors offer personalized advice, budgeting assistance, and negotiation with creditors to establish debt management plans.
Debt Management Plans
A debt management plan is a structured repayment plan arranged by a credit counseling agency. The agency negotiates with creditors to lower interest rates, fees, and monthly payments, and the individual makes a single monthly payment to the agency, which then distributes the funds to creditors. A debt management plan typically spans three to five years and can help individuals pay off their debts systematically.
Balance Transfer Credit Cards
Some credit card companies offer balance transfer promotions with a 0% interest period. Transferring high-interest credit card balances to a card with a promotional period can provide temporary relief from interest charges, allowing individuals to focus on paying down the principal debt.
Home Equity Loans or Lines of Credit
Homeowners may use the equity in their homes to obtain a loan or line of credit to consolidate high-interest debts. Home equity loans generally offer lower interest rates, but it's essential to consider the risk of using the home as collateral.
Bankruptcy
Bankruptcy is a legal process that allows individuals overwhelmed by debt to seek a fresh start. Chapter 7 bankruptcy involves the liquidation of assets to pay off debts, while Chapter 13 involves a court-approved repayment plan. Bankruptcy has significant long-term consequences and should be considered as a last resort after exploring other alternatives.
It's crucial to carefully evaluate the advantages and considerations of each alternative based on individual financial circumstances and goals. Seeking advice from a financial advisor or credit counselor can provide personalized guidance and help individuals make informed decisions to achieve debt relief effectively.
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Frequently Asked Questions About Debt Relief
What are the top 10 debt relief companies?
Here is a list of the 10 best debt relief companies in the USA.
- Freedom Debt Relief
- National Debt Relief
- Accredited Debt Relief
- New Era Debt Solutions
- Pacific Debt Relief
- InCharge Debt Solutions
- Citizens Debt Relief
- Community Tax
- CuraDebt
- DMB Financial
How much do debt relief companies charge?
The fees charged by debt relief companies can vary widely based on factors such as the company's policies, the type of debt relief service offered, the amount of debt involved, and individual circumstances. Debt relief companies typically charge fees in one of the following ways:
- Percentage of Debt: Some debt relief companies charge a percentage of the total enrolled debt as their fee. For example, if you enroll $10,000 in debts and the company charges a 20% fee, you would pay $2,000 in fees.
- Percentage of Savings: Other companies may charge a percentage of the amount they save you on the settled debts. For instance, if they negotiate a debt settlement that saves you $5,000, and their fee is 25%, you would pay $1,250 as their fee.
- Monthly Fee: Some debt relief companies charge a monthly fee for their services. The amount of the monthly fee can vary, and it may be a fixed amount or a percentage of the enrolled debt.
- Performance-Based Fee: Certain debt relief companies only charge fees if they successfully settle or resolve your debts. In this case, you would only pay a fee when a debt is settled, and the fee is typically a percentage of the settled amount.
- Upfront Fee: Beware of companies that demand upfront fees before any debts are settled. Charging upfront fees is prohibited by the Federal Trade Commission (FTC) under the Telemarketing Sales Rule, which governs debt relief companies.
- Negotiated or Customized Fee: In some cases, debt relief companies may be open to negotiation on their fees, especially if you have a substantial amount of debt or specific financial circumstances.
How do debt relief services affect my credit score?
Debt relief services can impact your credit score negatively. When debts are settled for less than the full amount, creditors may report the accounts as "settled" or "charged-off," indicating that the debt was not fully repaid. This negative status can lower your credit score. The extent of the impact depends on your credit history and the number of settled accounts. Rebuilding credit through responsible financial habits is crucial to improve your credit score after debt settlement.
How long do debt settlement programs take to complete?
The debt settlement process typically takes around 2 to 4 years to complete. During this time, individuals make regular payments into a savings or trust account, and the debt resolution company negotiates with creditors on their behalf. The exact duration can vary depending on the individual's financial situation, the amount of debt, and the negotiation process with creditors. Patience and commitment are essential for the process to be effective in resolving debts over time.
How much money can I save with a debt relief program?
On average, debt settlement may help you save around 40% to 60% of the total enrolled debt. The amount you can expect to save on your debts through settlement can vary depending on various factors, such as your total debt amount, the creditors' willingness to negotiate, and the specific debt settlement company's success in obtaining favorable settlements.
What is debt consolidation?
Debt consolidation is a financial strategy that involves combining multiple debts, such as credit card balances, personal loans, and other unsecured debts, into a single, new loan. This process simplifies debt management, as borrowers only need to make one monthly payment to the new lender instead of dealing with multiple creditors. Debt consolidation loans often aim to secure a lower interest rate than the existing debts, potentially reducing the overall cost of repayment. It can help individuals streamline their finances, make budgeting easier, and create a structured plan to pay off their debts more efficiently and become debt-free faster.
Summary of the Best Debt Relief Programs
- Freedom Debt Relief: Best debt relief company overall
- National Debt Relief: Best for credit card debt relief
- Accredited Debt Relief: Best for debt consolidation
- Community Tax: Best for tax debt relief
- New Era Debt Solutions: Best for debt relief from personal loans
*This article is provided by an advertiser and not necessarily written by a financial advisor. Investors should do their own research on products and services and contact a financial advisor before opening accounts or moving money. Individual results will vary. Foreign companies and investment opportunities may not provide the same safeguards as U.S. companies. Before engaging with a company, research the laws and the regulations around that service, and make certain the company is in compliance. For comprehensive guidance on U.S. investments and financial regulations, visit the Securities and Exchange Commission (SEC)’s Investor.gov.