What is the best debt relief company to work with?
National Debt Relief is the best overall debt settlement company, according to our research. National Debt Relief's low-cost fee structure and referral service make it a top option for people struggling with debts. Our highest-rated debt settlement companies all charge similar fees, ranging from 15% to 25% of the debt.
| Company | Forbes Advisor Rating | Learn More CTA text |
|---|---|---|
| SoFi® | 5.0 | Compare Rates |
| Upgrade | 4.9 | Compare Rates |
| Happy Money | 4.4 | Compare Rates |
| LendingClub | 4.4 | Compare Rates |
- The agency should be certified by the National Foundation for Credit Counseling or the Financial Counseling Association of America.
- Find out what kind of debt the agency works with. ...
- Visit their websites to check on fees and any requirements they may have.
Hiring a debt professional also comes at a cost and may not end up saving you money. "There's no guarantee that creditors will agree to negotiate or settle debts; some may even refuse to work with certain debt relief companies," says Tayne, "Your creditor could also sue you if they refuse other options."
Creditors are not legally required to settle for less than you owe. Stopping payments on your bills (as most debt relief companies suggest) will damage your credit score. Debt settlement companies can charge fees.
How Will Freedom Debt Relief Affect My Credit? Debt relief can negatively impact credit scores. That's because creditors typically won't negotiate with you or a third party until you miss payments. Payment history heavily influences credit scores, however, so late or missed payments can cause your score to drop.
Founded in 2008, National Debt Relief is a debt settlement company that negotiates the reduction of unsecured debt. If you have over $7,500 in unsecured debt, NDR may be able to cut that amount in half.
Every lender sets its own guidelines when it comes to minimum credit score requirements for debt consolidation loans. However, it's likely lenders will require a minimum score between 580 and 680.
National Debt Relief has been in business since 2009, and has helped hundreds of thousands of people get out of debt. While National Debt Relief won't be a fit for people who owe less than $7,500, it can be a good option for those with large debts.
Unfortunately, there is no such thing as a government-sponsored program for credit card debt relief. In fact, if you receive a solicitation that touts a government program to get you out of debt, you may want to think twice about working with that company.
How much do debt relief companies charge?
Debt settlement companies charge a fee, generally 15-25% of the debt the company is settling. The American Fair Credit Council found that consumers enrolled in debt settlement ended up paying about 50% of what they initially owed on their debt, but they also paid fees that cut into their savings.
According to the American Fair Credit Council, the average settlement amount is 48% of the balance owed.
- Best for credit card debt: National Debt Relief.
- Best overall: Money Management International.
- Best for customized options: Accredited Debt Relief.
- Best for all unsecured debt types: Americor Debt Relief.
- Best for customer support: Pacific Debt Relief.
- Best in availability: Century Support Services.
- There are tight income, asset and debt restrictions on who can apply for a DRO.
- If your circ*mstances change, you may still be required to repay your creditors.
- Your debt relief order will appear on your credit file for six years.
- They Contact You First. If you receive an unsolicited call or contact from someone offering to help you eliminate your debt, be extra cautious. ...
- They Ask for Fees Upfront. ...
- Credit Counseling. ...
- Debt Consolidation. ...
- Debt Settlement.
Using debt settlement options to reduce debt comes with several risks, including late payments on your credit report, potential charge-offs, settlement company fees, tax implications on forgiven balances, possible scams and the overall risk of settlement offers not working.
Debt forgiveness may negatively affect credit scores, making it challenging to obtain future loans or credit. Forgiven debt of more than $600 may be considered taxable income, potentially resulting in a hefty tax bill.
Fees and costs: Debt settlement companies may charge fees for their services, which can add to your overall debt burden. However, debt settlement is free if you do it yourself. Tax implications: The IRS may count the forgiven portion of your debt as taxable income, which may result in additional tax liabilities.
| Pros of DIY Debt Settlement | Cons of DIY Debt Settlement |
|---|---|
| Total control of the process | Total responsibility for the process |
| Potential faster repayment of debt | Requires more time, patience, effort, and negotiating skill than you may have at hand |
Paying off your debt in this way might seem more important, but the damage to your credit score can last for years. Settled debts also stay on your credit report for up to seven years and impact your future access to credit.
Does debt consolidation hurt your credit?
Debt consolidation can negatively impact your credit score. Any debt consolidation method you use will have the creditor or lender pulling your credit score, leading to a hard inquiry on your credit report. This inquiry will decrease your credit score by a few points. However, this credit score decline is temporary.
Key Takeaways. There aren't any free government debt relief programs for credit card or personal loan debt other than bankruptcy. Many types of government debt relief exist in the form of grants and low-interest loans for specific purposes.
If you're one of the millions of Americans struggling to repay high-interest debt, a debt relief plan may be an option to help you get your finances on track. But it's not a quick fix. It's a long-term solution designed to help you get out of debt over a period of time — typically several years.
In general, National Debt Relief has strong customer reviews. The company is accredited by the Better Business Bureau (BBB) and it has an A+ rating. On TrustPilot, it has a 4.7 out of five rating based on over 39,000 reviews.
We researched more than a dozen debt relief companies and New Era Debt Solutions was one of our top picks, thanks to its lower fees and high customer satisfaction ratings. If you owe more than $10,000, National Debt Relief is also a strong choice.
