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Best Debt Settlement Companies

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When it comes to selecting a debt settlement company, you’ll want to consider a few things: length of time in business, the company’s memberships and accreditations, customer satisfaction and overall transparency in doing business. The American Fair Credit Council (AFCC) sets the standard in debt settlement, so looking for an agency that holds a membership with them is a good place to start. Accreditation with the International Association of Professional Debt Arbitrators (IAPDA) is another good sign.

In selecting our top picks, we looked at the company’s accreditations, the credentials held by their staff, years of experience, terms of service, qualifying factors and overall customer satisfaction. We’re recapping our top picks below.

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Accredited Debt Relief logoAccredited Debt ReliefCreditAssociates logoCreditAssociatesFreedom Debt Relief logoFreedom Debt ReliefNational Debt Relief logoNational Debt ReliefPacific Debt Inc logoPacific Debt IncCountryWide Debt Relief logoCountryWide Debt Relief
# of reviews55782628,81550,023543490
Our pick for Bankruptcy alternative Online tools Industry experience Credit card debt Account management Large debts
Debt minimum $10,000 $10,000 $15,000 $10,000 $10,000 $10,000
Repayment terms 12 - 48 months 24 - 36 months 24 - 48 months 24 - 48 months 24 - 48 months 12 - 48 months
Fees 15% - 25% of debt Typically 15% - 25% 18% - 25% of debt 15% - 25% 15% - 25% of enrolled debt 18% of enrolled debt
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All information accurate as of time of publication.

Compare our top 6 debt settlement companies

Our pick for bankruptcy alternative Accredited Debt Relief
  • Debt minimum: $10,000
  • Repayment term: 12 - 48 months
  • Fees: 15% - 25% of debt

Accredited Debt Relief works with credit card debts, personal loans through banks or credit unions, private student loans, collection agencies and third-party debt buyers.

Accredited Debt Relief is focused on resolving debt obligations through debt settlement as an alternative to bankruptcy. It’s an accredited member of the AFCC and has a portfolio of thousands of settled accounts. You may appreciate the “proven results” page on its site, which provides mini case studies of settled debt. One such example shows Accredited Debt Relief settling over $20,000 in debt for around $6,000, or a savings of 70%.
Accredited Debt Relief isn’t available in every state. Visit its website to see if you qualify for its service.
Our pick for online tools CreditAssociates
  • Debt minimum: $10,000
  • Repayment term: 24 - 36 months
  • Fees: 15% - 25%

CreditAssociates only works with unsecured debt.

According to CreditAssociates, it’s settled over $1 billion in debt for its clients. The company is a member of the AFCC. Like most debt settlement companies, it works with unsecured debt, which is typically credit card debt, medical bills and personal loans. The savings calculator on its website can help you estimate how much you can expect to save by working with the company.
CreditAssociates requires a minimum of $10,000 in unsecured debt to enter its settlement program. While this is not uncommon, there are companies with lower minimums if you need them.
Our pick for industry experience Freedom Debt Relief
  • Debt minimum: $15,000
  • Repayment term: 24 - 48 months
  • Fees: 18% - 25% of debt

Freedom Debt Relief works to settle credit card debt, personal loans, medical bills and some private student loans.

Freedom Debt Relief states that it has has settled over $10 billion in debt, settling over 2 million accounts, since 2002. The company also reports that more than 750,000 clients have enrolled in the Freedom Debt Relief program, and the company settles over 50,000 accounts and $215 million in debt each month. Freedom Debt Relief is a founding member of the AFCC.

Clients have access to an online dashboard to stay up to date on the progress of their settlement 24/7. If you work with Freedom, there are no upfront costs, and you won’t be charged any fees until after a settlement has occurred.

It does list a slightly higher than average starting fee of 18% to 25% percent, compared to the national average of 15%.
Our pick for credit card debt National Debt Relief
  • Debt minimum: $10,000
  • Repayment term: 24 - 48 months
  • Fees: 15% - 25%

National Debt Relief can work with credit card debt, personal loans, installment loans, overdraft fees and business debts.

National Debt Relief is a member of the AFCC, the IAPDA and the U.S. Chamber of Commerce. Additionally, we like its dedication to maintaining a presence and good standing on independent review sites. This shows a commitment to customer satisfaction and a level of transparency about its practices that helps to instill confidence in its services.
National Debt Relief can work with the majority of unsecured debts, and even covers a few secured debt types, but its specialty is in negotiating with major credit cards and banks.
Our pick for account management Pacific Debt Inc
  • Debt minimum: $10,000
  • Repayment term: 24 - 48 months
  • Fees: 15% - 25% of enrolled debt

Pacific Debt can settle credit card debts, personal loans, payday loans, medical bills and balances on repossessed vehicles.

Pacific Debt charges no upfront fees, and you’ll only pay for its services if its representatives are successful at negotiating your debt. It’s an accredited member of the AFCC and BBB. Pacific Debt assigns each client a personal account manager to be your advocate throughout the process and gives you a single point of contact.
Pacific Debt is not licensed in all states. As part of the settlement process, Pacific Debt does acknowledge that your credit score may drop, but this is not uncommon for any debt settlement provider that requires you to close open lines of credit. A good debt relief company will help educate you on ways to rebuild your credit after this process, so be sure to ask about this when meeting with your credit counselor.
Our pick for large debts CountryWide Debt Relief
  • Debt minimum: $10,000
  • Repayment term: 12 - 48 months
  • Fees: 18% of enrolled debt

Countrywide Debt Relief works with credit cards, payday loans, installment loans, medical collections, deficiency balances on auto loans and personal lines of credit.

Countrywide Debt Relief is an accredited member of the AFCC and has multiple case studies on its website to back up its proven results claim of helping thousands of people resolve millions of dollars in debt.
To qualify, you’ll need to have $10,000 or more in unsecured debt. While Countrywide does have accreditation through the AFCC, it’s not an accredited member of IADPA like some of the other companies on our list.

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    How to settle debt

    There are several options if you choose to settle your debts with your creditors, including using a debt settlement company. Some of the most common ways to settle debts are:

    1. Through a debt settlement company
      If you go through a debt settlement company, like National Debt Relief or Freedom Debt Relief, you typically stop making payments on your debts and pay the settlement company instead. That company then deposits the money into an account to form a lump sum. Once you have a large enough lump sum, the company negotiates a settlement with your lenders on your behalf. Debt settlement companies can’t charge you upfront fees. You’ll pay them a percentage of your total or eliminated debt, typically 15% to 25%.
    2. Hire a debt settlement lawyer
      While most people go through a debt settlement company, you can also choose to use a lawyer. Keep in mind, a lawyer can bill by the hour, charge a percentage of your total of eliminated debt or charge a flat fee per lender. They act as your personal debt settlement company, negotiating a settlement on your behalf, handling all the paperwork and fielding any phone calls from your lenders.
    3. Do it yourself
      If you find yourself in a significant amount of debt, it doesn’t hurt to call your creditor on your own. Some creditors offer hardship programs for people who are dealing with tough situations like unemployment or a severe illness. Hardship plans might consist of lowered interest rates coupled with waived fees. These plans usually last anywhere from six months to a year and are voided if you miss a payment.

      If you want to negotiate a settlement yourself, you should save as much money as you can to make a lump-sum offer. This might mean taking on a part-time job, selling valuables or borrowing money from a family member. Creditors are more likely to take a lump-sum offer because it puts money in their pockets immediately. Be honest about why you can’t pay. Creditors will look at your credit report, and if they see you’re still able to make payments on other loans or credit cards, they’ll be less likely to be lenient with you.

    Alternatives to debt settlement

    A debt settlement program isn’t the only debt relief option available to consumers struggling with an overwhelming amount of debt. If a debt settlement program doesn’t seem like the right choice for your situation, there are other debt relief options available. If you’re still able to make payments on your current debts, a debt consolidation plan may be a better option. With debt consolidation, your current debts are combined and paid off with one loan that typically has a lower interest rate or better terms. 

    Another option you might consider is filing for bankruptcy. The two most common types of bankruptcy cases are Chapter 7 and Chapter 13. Filing a Chapter 13 bankruptcy case involves reorganizing your assets and may forgive a portion of what you owe, while a Chapter 7 bankruptcy case requires the complete liquidation of your assets.

    With a Chapter 13 bankruptcy case, you participate in a court-mandated repayment plan that’s similar to a debt settlement program. With a Chapter 7 bankruptcy case, you must prove you’re unable to pay your loans back, and the majority of your personal assets will be seized and liquidated to pay back your creditors.

    While filing for bankruptcy can seem like the easiest way out of debt, it’s a choice that comes with serious repercussions. You should only file for bankruptcy as a last resort, after considering options like debt consolidation or a debt settlement program. Bankruptcy damages your credit rating and stays on your credit report for seven years. Since it’s a public record, your current and future employers can see whether you filed for bankruptcy.

    Debt settlement pros and cons

    While debt settlement has many benefits, it’s important to understand the pros and cons of a debt settlement program before committing to a company or plan. Make sure to bring up any potential risks with your debt settlement firm before committing to a settlement plan.

    Debt settlement benefits

    Debt settlement firms provide many potential benefits to customers, but be sure you understand that a company can’t guarantee any of these benefits or results before going through a debt settlement program. Most debt settlement firms have a refund guarantee, and you are entitled to all of your funds regardless of whether the company successfully reaches a settlement. Potential benefits of debt settlement include:

    • Paying off your debt sooner
    • Not having to pay the full amount you owe
    • Avoiding calls from creditors

    Debt settlement risks

    While the benefits of debt settlement can outweigh the risks, there are potential disadvantages you may face during a settlement plan, including:

    • Your creditors could refuse your settlement negotiations
    • Negotiating could take so long that you end up paying the same amount you owed originally
    • Your credit score may suffer

    Debt settlement FAQs

    What is debt settlement?

    Debt settlement is a debt relief program for consumers who want to lower the payoff amount of their existing debt. A debt settlement company offers to settle your debt for an amount lower than the amount you owe. Your debt settlement company will require you to make fixed monthly payments to an escrow account.

    There are many risks to debt settlement, and settlement should be considered only after investigating credit counseling and debt consolidation. You may want to consider debt settlement if:

    • You are living paycheck to paycheck and only making the minimum payments to your debts without seeing the balance go down.
    • You have fallen behind on paying your debts and can’t catch up on making the required minimum payments to your creditors.
    • You stopped paying your creditors due to a financial hardship, and the creditor has hired a collection agent.
    • You want to negotiate your debts down, but you don’t have the funds in a lump sum and need to make payment arrangements.
    • You are being harassed and overwhelmed by creditors and collectors.
    How does debt settlement work?

    Debt settlement works when negotiators call a consumer’s creditors and attempt to convince them to allow the consumer to pay one large lump sum to pay off their debt. This lump sum is less than the total amount of debt originally owed. In exchange for this payment, the creditor forgives the debt owed by the consumer.

    Debt settlement firms start by advising you to stop paying monthly bills to your creditors. Instead, you make payments to a savings account set up by the debt settlement company. While you’re not paying your monthly bills, the savings account provides a place where your funds can grow until you have a large enough sum to negotiate with your creditors. Debt settlement companies typically start by negotiating your smallest debts first and leave larger debts to accrue interest or late payment fees, so make sure you work with your debt settlement firm to prioritize debts instead of letting the firm choose on its own.

    Debt settlement programs typically take 24 to 48 months to complete. Fees range from 15% to 25% of the amount settled, which means you might end up paying as much as 80% to 90% of the total debt amount once you pay your fees. It's also important to note that you'll likely incur penalties and higher interest payments from your creditors by not paying your monthly bills on time. However, debt settlement is often faster than paying off your debts by making the minimum monthly payments.

    What types of debt can be settled?

    Unsecured debt like credit cards and medical bills are the most common types of debt involved with settlement agreements. If you file for bankruptcy, credit card companies and medical facilities could get nothing. On the other hand, federal loans — such as federal student loans — are typically not eligible for debt settlement.

    Here are some potential types of debt eligible for the debt settlement process:

    • Credit cards
    • Personal loans
    • Private student loans
    • Medical bills
    • Utility bills
    • Auto-repo balances
    • Short-pay balances
    • Cellphone bills

    Keep in mind that creditors aren’t legally obligated to settle a debt with you. However, it’s often their simplest option for recovering funds. They can usually get more money through a settlement than using a collection agency or an attorney.

    How does debt settlement affect your credit score?

    Unlike other types of debt relief programs, debt settlement generally lowers credit scores in the short-term because the lender or credit card company will report the debt as “settlement accepted,” “paid less than full balance” or “late-payment status” for several years until the account is fully paid. These settled debts can leave a negative mark on your credit report for up to seven years. You also typically stop making payments to your creditors during debt settlement, which also affects your credit score. For this reason, only opt for debt settlement if you fall within one of the scenarios above and do not intend to make a big purchase anytime soon. If you decide to settle your debt and do not accrue further debt, over time as your debts are paid off, you can improve your score.

    Debt settlement can be a good alternative to bankruptcy. If you’re behind on your accounts, and a creditor thinks you’re unlikely to pay it in its entirety, it may be open to a settlement. However, if you have a great credit score, can make monthly payments or you're able to work out a lower monthly payment plan with your creditor(s) yourself, debt settlement is not recommended. Another option to consider is credit counseling. If you qualify, a credit counselor can create a debt management plan that may lower your payments anywhere from 20% to 50%. There is a monthly fee for the service, and you will not reduce the amount you owe, only the APR.

    Is debt settlement a good idea?

    Working with a debt settlement company means that you’ll stop paying your creditors for a while and then offer them a lump-sum amount in order to erase the total debt. While paying off your debt for a fraction of the amount is appealing, keep in mind that since debt settlement involves not paying your monthly bills, it will take a toll on your credit. It could take years to rebuild credit to apply for another credit card or mortgage.

    Is debt settlement really worth it?

    If you’re deep in debt, debt settlement could help you pay off your debts for a fraction of the amount. Keep in mind that, while you won’t be making monthly payments to your creditors, you will have to make payments to the debt settlement company you’re working with. Debt settlement companies will combine your monthly payments into a lump sum, which they’ll offer your creditors to settle your debt.

    When working with a debt settlement company, make sure that you have a written contract that includes all the possible fees and payment information. Debt settlement companies usually charge a service fee of anywhere from 15% to 20% of your debt amount. Also, because debt settlement involves missing monthly payments, your creditors could tack on late payment fees.

    What percentage should I offer to settle debt?

    Depending on how behind you are on payments or how much you owe, your creditor might be open to settling for anywhere from 30% to 70% of your original debt. Work with your creditors to settle on a percentage, but remember, they’re not obligated to agree to your debt settlement offer.

    Not sure how to choose?

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