Best debt relief and settlement companies of March 2024 (2024)

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Best debt settlement companies

• Accredited Debt Relief: Best for fast debt payoff.
• National Debt Relief: Best for customer satisfaction.
• New Era Debt Solutions: Best for large debts.
• Freedom Debt Relief: Best for tracking progress.
• CuraDebt: Best for smaller debts.
• Liberty Debt Relief: Best for private student loans.
• Century Support Services: Best for transparent terms.
• JG Wentworth Debt Relief: Best for additional features.
• Pacific Debt Relief: Best for online resources.

Compare the best debt settlement companies

What is debt settlement?

Debt settlement is a process where a person negotiates with their creditors to pay back a portion of their debts in exchange for forgiveness of the remaining debt. Typically, this is accomplished with the help of a debt settlement company experienced in debt negotiation.

Settlement can be a useful strategy if you’re struggling to keep up with your payments — but it’s important to understand the potential consequences. Debt settlement typically involves missing payments and allowing debts to go into default before negotiating a lump-sum payment with your creditors.

Keep in mind: Debt settlement can harm your credit score and result in legal action from creditors. Before pursuing debt settlement, seek guidance from a qualified financial advisor or credit counselor.

How does debt settlement work?

Debt settlement, sometimes referred to as debt relief, involves negotiating with creditors to pay a portion of your outstanding debt in exchange for the creditor agreeing to forgive the remaining balance. This is usually accomplished with the help of a debt settlement company that handles negotiations for you and guides you through the process. During the negotiation phase, you’ll work together with your creditor to establish a new payment plan that you can realistically afford.

Once an agreement has been reached, you’ll typically make payments over a specified period of time until the debt has been paid in full. While debt settlement can be an effective way to manage debt and avoid bankruptcy, it’s important to note that the process is complex and isn’t the right fit for everyone.

How to qualify for debt relief

Debt relief is an umbrella term often used to describe several types of debt relief products, including debt settlement and debt management plans. Qualification requirements for these programs vary by company and the type of debt relief offered.

Most debt settlement companies require consumers to meet minimum debt requirements to qualify for debt relief programs — usually around $7,500 in total debt but may be as low as $5,000 or as high as $10,000.

In addition to having enough debt to qualify for debt settlement, consumers should also demonstrate an ability to make the necessary monthly payments to the debt settlement company. Keep in mind, though, that these requirements vary by company.

How to find the best debt settlement company

Debt relief can help you get out of debt, but it’s important to work with an experienced and reputable company that can guide you through the process and help maximize your savings. Taking the time to do your research before selecting a company can help you achieve successful debt settlement results while protecting your financial and legal interests.

Follow these tips to find the best debt settlement company:

1. Do your research. Check the qualifications and licensing of any debt settlement company you’re considering. Ensure the company isn’t doing business with any collection agencies or creditors known to violate consumer protection laws and see if the company is a member of any reputable organizations, such as the American Fair Credit Council (AFCC) or The Association of Settlement Companies (TASC). Reading customer reviews to get an idea of previous customer experiences with the company is also a good idea.
2. Compare companies. Compare fees, terms and services offered by different companies to find one that fits your needs. Verify whether there are any hidden costs or fees associated with using a particular debt settlement service provider.
3. Ask questions. Find out about the company’s negotiation strategies and experience working with creditors or collection agencies so you can assess how effective they’ll be at settling your debt successfully. Also, ensure the company is willing to work closely with you on a payment plan that meets your budget and timeline for debt repayment.
4. Inquire about other services. Find out if the company offers additional services, such as credit counseling or financial planning advice, to improve your overall financial situation after completing a successful debt settlement program.
5. Don’t pay until both parties sign an agreement. Ensure that all paperwork related to your debt settlement is signed off by both parties before any money changes hands.

Debt settlement vs. debt management: What's the difference?

Debt settlement involves negotiating with creditors to reduce the total amount of debt owed, often in exchange for a lump sum payment. On the other hand, debt management involves working with a credit counseling agency to create a personalized plan to repay debt over time. The key difference between the two is that debt management doesn’t involve any reduction of the total amount owed, whereas debt settlement typically does.

Debt management is best for those who have a steady income and can make consistent monthly payments, whereas debt settlement may be better suited for those who are struggling to make their monthly payments and are facing delinquency or default. Ultimately, the best option will depend on your specific financial situation.

Is debt settlement a good idea?

Settling debt can be a good idea for some, but it’s not a one-size-fits-all solution. Debt settlement can help you when you’re in over your head and need some help to get back afloat.

On the flip side, it can negatively impact your credit score and result in fees and taxes on the forgiven debt. Weigh the pros and cons and seek professional guidance before deciding on a course of action.

Pros

• Reduced debt. When the debt settlement company negotiates with your creditors, they aim to reduce the total amount you owe. This can result in lower payments and an overall reduction of financial burden.
• Faster resolution. Debt settlement often leads to a faster resolution than other strategies, such as debt management or bankruptcy filings.
• Fewer collection efforts. Settling debt can help prevent pesky phone calls and letters from collection agencies trying to collect payment for outstanding debt.

Find out if a debt collector can get into your bank account and garnish your wages.

Cons

• Credit score impact. Though you can fix your credit afterwards, settling debt can have a negative effect on your credit score initially. This is because creditors will usually report any missed payments and the settlement itself to credit bureaus.
• Fees. Debt settlement companies often charge fees for their services, which can add to the total amount of debt owed.
• Tax implications. Depending on your individual circ*mstances, forgiven debt may be taxable income, which could result in an additional expense come tax time.
• Potential for legal action. Creditors could file a debt collection lawsuit against you if you fail to make regular payments during the settlement process.

Alternatives to debt settlement

Debt settlement can be an effective way to manage debt if it’s done with the help of a qualified financial advisor and with full knowledge of the potential consequences. However, it’s not necessarily the right option for everyone.

Make sure you consider these alternatives to debt settlement before committing:

• Debt management plan: A debt management plan is a form of credit counseling that involves creating an organized repayment schedule with reduced interest rates negotiated with creditors.
• Debt consolidation loan: Debt consolidation involves combining — or consolidating — multiple debts into one loan. This can help reduce and streamline monthly payments. Plus, you may qualify for a lower interest rate if your credit score has improved since taking out the existing loans. The best debt consolidation loans offer accessible qualification requirements, flexible repayment terms and competitive interest rates.
• Bankruptcy: Filing for bankruptcy is an option, though you should only use it as a last resort because of the long-term consequences on your credit score and financial life.
• Negotiate with creditors directly: Negotiating with creditors on your own may allow you to create your own payment plans or settle debts without incurring additional fees or damaging your credit score unnecessarily.
• Part-time job or side hustle: Taking on extra work, such as freelance jobs, part-time jobs or side hustles, can provide the income needed to pay down debt quickly and stay on top of bills in a more manageable way than debt settlement typically allows.
• Other debt payoff strategies: You can also attempt to pay off your debt yourself using a strategy like the debt snowball method.

If you’re considering a last resort, find out how long bankruptcy stays on your credit report.

Frequently asked questions (FAQs)