How much does a debt relief program cost?

There are a few different kinds of debt relief programs with different fee structures

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Debt relief is an umbrella term used to define the many options and programs that can help you manage your debt payments or even reduce the entire amount you owe.

“They include debt settlement, consolidation, credit counseling and bankruptcy,” explained Lorenzo Nourafchan, a certified public accountant.

Unfortunately, debt relief often doesn’t come free. You’ll pay an upfront fee or monthly subscription fee to work with debt settlement or credit counseling companies. But the benefit here, as Nourafchan explained, is that “these tailored approaches can help individuals regain control of their finances and pave the way toward a debt-free future.”


Key insights

  • Debt relief programs come in many forms, including settlement, counseling and management plans, to help you regain control of your finances.
  • Debt settlement is often a costly option but leads to complete debt payoff, while credit counseling helps you understand the habits behind your debt.
  • Those in debt can explore alternative strategies like debt consolidation, DIY debt repayment and negotiating directly with creditors.

What is a debt relief program?

Debt relief programs are financial tools and programs that help individuals regain control of their finances and reduce debt burdens such as credit card debt and medical debt.

The programs come in different forms and have differing costs, including:

  • Debt settlement involves negotiating with creditors to pay a reduced lump-sum payment, typically less than the total debt amount. It's a way to settle debts for less than what you owe, but many borrowers still end up owing a significant percentage.
  • Credit counseling entails working with a certified credit counselor who helps you create a budget, manage your debts and even negotiate with creditors for lower interest rates or fees. It's a structured approach to debt management and financial education and often has relatively low fees.
  • Debt management plans (DMPs) are paid programs offered by credit counseling agencies. They involve consolidating your debts into a single monthly payment, which the agency then distributes to your creditors. DMPs often provide reduced interest rates and fees.

» MORE: How to get out of debt

Debt settlement cost

When you’ve reached the point where debt settlement is your last option, you negotiate with creditors to pay less than the full amount you owe. You’ll typically work with a lawyer or debt settlement company to navigate the process and pay them a fee for taking on the task of negotiating your debt.

Debt settlement fees are typically 15% to 25% of your debt (either the total debt originally owed or the lower amount it’s settled for, depending on the company). That said, “the costs of debt relief programs can fluctuate significantly, encompassing service fees, settlement fees, counseling fees and legal fees,” said Nourafchan.

  • Service fees: Debt settlement companies typically charge a service fee for managing and negotiating your debts. This fee is usually a percentage of the total enrolled debt.
  • Settlement fees: When a debt is successfully settled, some companies charge a settlement fee. This fee is also a percentage of the forgiven debt.
  • Legal fees: If you work with a lawyer, you’ll need to pay separate fees from the debt settlement company. If you’re involved in a legal case, a lawyer is especially beneficial but costly.

The fees with debt settlement can add up quickly, so be sure to read all the fine print and calculate what you could end up owing. Stephanie, a reviewer in Utah, said the debt settlement company she worked with was helpful, but the fees ate into her settlement. 

“Monthly fees charged and your settlement fees are as much as the money they saved you,” she said. “You aren’t really saving much unless you call your creditors yourself and try to negotiate your debt.”

» COMPARE: Best debt settlement companies

Credit counseling cost

Credit counseling companies are typically nonprofits, meaning you won’t be charged anything to work with them. These agencies offer guidance on budgeting, debt management and general financial planning. You often won’t get negotiation help from a credit counseling agency, as its goal is education rather than settling a debt for less than you owe.

While credit counseling services may be free, credit counseling agencies do charge fees if they start managing (not lowering) debt on your behalf through a DMP. However, these fees should be manageable with your budget. For example, a reviewer in Texas who set up a payment schedule with a credit counseling company said, “The monthly payments and fees were easily handled within my budget.”

When you work with a credit counseling agency, you start with an initial counseling session where you ask questions and the counselor gets to know your financial situation. From there, your counselor provides you with a plan and helps continue coaching you until you’ve developed healthier money habits.

» COMPARE: Best credit counseling services

Debt management plan cost

A DMP is a program that credit counseling agencies offer to help you get your debt under control. Through a DMP, your unsecured debts get combined into a single monthly payment. Agencies negotiate with creditors typically not to lower the amount you have to pay but to reduce interest rates and other fees so you have a more manageable repayment schedule.

Individual agencies charge different amounts for DMPs. In general, you’ll pay two separate fees while working with these agencies.

  • A one-time set-up fee: The initial set-up fee you pay when you enroll in the DMP.
  • A monthly maintenance fee: Fees paid throughout the duration of your participation in the DMP.

Credit counseling companies try to keep these fees low, with companies like InCharge charging just $33 per month and ClearPoint charging $50 maximum each month.

In some cases, your bank or credit union may refer you to a counselor and even cover the fees. Angela, a reviewer from Texas, said her bank directed her to a counseling service after being saddled with debt from payday loans: “The payment plan was affordable and if there was an issue where I couldn’t do it, all I had to do was call them and they made arrangements for me to follow it with my next payment.”

» COMPARE: Best debt management plans

Other debt relief options

When you have a mountain of debt you’re looking to climb, there are numerous resources to help you get the relief you need. These alternatives offer varying approaches to managing and reducing your debt, including:

  • Debt consolidation loans: A debt consolidation loan combines multiple debts into a single, lower-interest loan. This simplifies payments and helps to reduce the overall interest you’ll pay over the life of the loan.
  • Balance transfer credit cards: Balance transfer credit cards offer a promotional 0% annual percentage rate (APR) period on transferred balances, allowing you to pay off multiple debts interest-free during this period.
  • Negotiating directly with creditors: You can try negotiating directly with creditors for lower interest rates, reduced payments or more favorable terms. While difficult and often intimidating, this saves you money on legal fees or debt management services.
  • Bankruptcy: While it’s a very last resort, filing for bankruptcy is a legal process that can provide debt relief for those facing overwhelming debt burdens. There are significant credit and financial long-term consequences with this option, so be aware before you consider bankruptcy.

Could your debt be reduced or forgiven? Take our financial relief quiz.

    FAQ

    How do debt relief programs work?

    Debt relief programs work by providing structured strategies and assistance to help individuals manage and reduce their outstanding debts. These programs typically involve negotiations with creditors to achieve more favorable terms, such as lower interest rates or reduced principal amounts.

    What does it take to qualify for debt relief?

    Debt relief programs are typically designed for individuals with significant unsecured debts, such as credit card or medical debt. Individuals need to demonstrate serious financial hardship to work with certain debt relief and settlement programs.

    What is the National Debt Relief program?

    National Debt Relief is not a government program, but rather a debt settlement company that helps individuals negotiate with creditors to reduce and resolve unsecured debts, such as credit card debt. The program aims to help clients achieve debt relief by settling debts for less than the full amount owed.

    Bottom line

    There are several approaches available to individuals struggling with debt, including debt settlement, credit counseling and DMPs. Ultimately, there's no one-size-fits-all solution. Each option has its own price point and duration. The key is to select the approach that aligns best with your unique circumstances to pave the way toward financial stability and debt freedom.


    Article sources
    ConsumerAffairs writers primarily rely on government data, industry experts and original research from other reputable publications to inform their work. Specific sources for this article include:
    1. Clearpoint, “ Service Fees .” Accessed Sept. 19, 2023.
    2. Consumer Financial Protection Bureau, “ What's the difference between a credit counselor and a debt settlement or debt relief company? ” Accessed Sept. 19, 2023.
    3. InCharge Debt Solutions, “ Debt Settlement .” Accessed Sept. 19, 2023.
    4. InCharge Debt Solutions, “ How Much Does A Debt Management Program Cost? ” Accessed Sept. 19, 2023.
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