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Debt relief, or debt settlement companies, are services that claim they can negotiate with creditors to reduce the amount of debt owed by their clients. Debt relief is not without controversy, and there are risks you need to be aware of.

If you owe a large sum of money at high interest and have had no luck with other debt consolidation methods, you might want to consider using a debt relief company. Read on to learn about the best debt relief companies.

Money’s main takeaways
We recommend debt relief only when other, more favorable options are not viable. Debt consolidation loans, balance transfer credit cards and credit counseling make better financial sense. Debt relief companies require you to stop paying creditors in order to increase their negotiating power. This will almost certainly have a negative impact on your credit score. The upside is that a debt relief program can enable you to settle your accounts for less than you owe. Debt relief can help you avoid bankruptcy, but there is no guarantee your creditors will accept the settlement proposed by the debt relief company. Our Top Picks for Best Debt Relief Companies of December 2023
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Best Debt Relief Companies Reviews

Programs can take as little as 24 months

No charge until you’ve received results
Multiple debt relief options availableCannot track progress online like some competitor platforms
Not available in every state

HIGHLIGHTS

Debt management availableYesDebt settlement availableYesAdditional services offeredDebt consolidation loansSettlement fees15%-25% of enrolled debt

Why we chose it: We selected Accredited Debt Relief for our top spot because the company can get you out of debt fast. Though the timeframe will depend on your situation, Accredited’s debt relief program can take as little as 24 months to complete.

Accredited Debt Relief offers a free consultation online or by phone, which will set you up with a personalized option that best suits your financial situation.

If debt settlement isn’t the right path for you, Accredited can offer other options to help solve your debt issues. The company can pair you with one of its debt consolidation loan affiliates, which can help you with credit card consolidation and other types of unsecured debt consolidation. Affiliate consolidation loans range from $1,000 to $100,000 and have APRs that range from 6% to 36%.

Accredited Debt Relief’s debt settlement program fees vary by state, and services are not available everywhere. While the company charges a fee in line with other debt settlement companies — 15% to 25% of the debt you’ve enrolled in the program — it doesn’t charge you until your debts have been reduced.

In addition, while Accredited can assist with unsecured debts like credit cards and medical bills by negotiating with creditors to adjust the repayment amount, the company cannot help with federal student loans or any secured debts with collateral attached.

Staff includes licensed tax practitioners, IRS enrolled agents and CPAs

Free consultation
Available in all 50 states
Minimum debt required not disclosedDoesn’t list prices online

HIGHLIGHTS

Debt management availableNoDebt settlement availableNoAdditional services offeredTax resolution, tax preparation, tax assuranceSettlement feesN/A

Why we chose it: Community Tax’s team of professionals specialize in settling tax debt and finding solutions for issues with the IRS.

Community Tax is a debt relief company that helps clients resolve IRS tax debt by offering services such as tax resolution, tax planning, tax preparation and bookkeeping. The company also has a team of experts that provide free tax analysis.

Although the organization does not disclose a minimum debt requirement, most tax relief companies typically require around $10,000. In addition, Community Tax doesn’t list prices for its services online. Its website has limited information available, but you can call in and discuss your tax challenges during a free consultation.

Community Tax was founded in 2010 and is available in all 50 states. It offers bilingual services online and in person in English and Spanish. Educational resources are available in both languages as well.

No upfront fees

$7,500 minimum required debt for debt relief services
Online progress tracker available 24/7Fees can amount to 25% of enrolled debt
Not available in all states
No live chat customer support online

HIGHLIGHTS

Debt management availableNoDebt settlement availableYesAdditional services offeredDebt consolidation loansSettlement fees15%-25% of enrolled debt

Why we chose it: Freedom Debt Relief is an excellent option for settling smaller debts as its minimum required debt is $7,500, lower than most competitors. The company also offers a free consultation to determine if its services are right for you.

Like most debt settlement companies, Freedom asks you to deposit payments according to a custom plan into a dedicated account. After your account reaches a certain amount, Freedom then begins negotiating with lenders on your behalf.

On average, Freedom Debt Relief’s plans take 24 to 48 months to complete. This can vary depending on factors such as your level of debt, your creditors, and the amount you are able to save each month. Another helpful feature is the company’s Client Dashboard, an online portal that enables you to track your progress 24/7.

Depending on your state, the cost of Freedom Debt Relief’s services ranges from 15% to 25% of your enrolled debt. Freedom will only charge fees once you have made your first payment and it has negotiated with your creditors or debt collectors, agreeing on the settled amount they will accept. Freedom Debt Relief will disclose your fees upfront and will not increase them.

Freedom Debt Relief also offers a program guarantee of up to 100% if the total program cost exceeds your total debt. The company provides services for Spanish speakers, but services are only available in some states.

Money back guarantee availableNo fees until accounts are settledArbitrators are IAPDA accreditedFees can amount to 25% of enrolled debtNo mobile appNot available in every state

HIGHLIGHTS

Debt management availableYesDebt settlement availableYesAdditional services offeredDebt consolidation loans, credit counseling, bankruptcy referralsSettlement fees15%-25% of enrolled debt

Why we chose it: National Debt Relief has a solid reputation and history that shows it is an excellent option, so much so that the company offers a 100% satisfaction guarantee.

National Debt Relief offers a solid satisfaction guarantee. If the company can’t settle your debt, or you are unsatisfied with the process for any reason, National allows you to cancel the service without penalties or fees other than those associated with debt that has already been settled.

National Debt Relief doesn’t charge any upfront fees, and costs range from 15% to 25% of your enrolled debt. The company says that, on average, customers can become debt free in 24 to 48 months. However, National doesn’t offer a live chat feature or a mobile app, so to receive a free quote, you must fill out a form online or call.

Additionally, National boasts a team of certified International Association of Professional Debt Arbitrators.

High customer satisfaction

Fees are not charged until a settlement agreement has been made
AFCC accredited
Lack of transparency with fees
Not available in three states
Minimum debt not disclosed

HIGHLIGHTS

Debt management availableNoDebt settlement availableYesAdditional services offeredFree debt analysisSettlement feesNot disclosed

Why we chose it: New Era Debt Solutions has some of the highest customer satisfaction ratings of all the debt relief companies we’ve reviewed.

New Era Debt Solutions has an excellent track record, averaging 4.9 out of 5-star ratings on multiple online review sites. Additionally, consultants, resources and services are all available in Spanish.

The company is also transparent about its statistics, listing average settlement amounts, percentages of clients that drop out before completing the debt relief program, and more on its website for potential customers to consider before signing up.

New Era employs debt relief attorneys and negotiators to help you get the best debt settlement possible for your unsecured debt. The company website notes that it takes an average of 28 months for customers to become debt-free through its program and that it doesn’t charge any upfront fees but collects only once a settlement agreement has been made.

New Era Debt Solutions operates in all states except for Maine, Oregon and Iowa. However, the website does not disclose fees and the minimum debt necessary for eligibility.

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Other debt relief companies we considered
Pacific Debt Relief
Free consultation
Helps with many kinds of unsecured debt
Need more than $10,000 in unsecured debt
Not available in every state

Pacific Debt Relief helps qualified applicants consolidate and reduce their debt by up to 50% and can help settle multiple types of debt, including credit card debt, medical debt, business debts, personal loans, payday loans and more. To qualify, customers must have a minimum of $10,000 in unsecured debt. However, Pacific Debt Relief is less accessible than competitors, as customers don’t have an online account or portal.

CuraDebt
Tax relief services available
No upfront fees
Out-of-date website
Debt relief services not available in every state

CuraDebt helps customers with the debt settlement of credit cards, lines of credit, personal loans, medical bills, business debts, some secured debts, back taxes and IRS debt. While CuraDebt’s tax debt relief services are available in every state except Pennsylvania, its other debt relief services are unavailable in 15 states.

CuraDebt doesn’t charge monthly or upfront fees. Its website states that its costs are 20% or less of the total debt amount on average.

DMB Financial
Free consultation
Over $1 billion in debt managed
Recent legal trouble with CFPB for unlawful fees
Doesn’t list prices online

DMB Financial is a debt settlement company that will work with your creditors to help you restructure your debt and create a manageable time frame to repay them. The company offers a free consultation through one of its certified program consultants. However, DMB Financial doesn’t list prices for its services online.

The Consumer Financial Protection Bureau (CFPB) filed a lawsuit against DMB Financial in December 2020 for charging consumers unlawful fees, which resulted in a $5.4 million penalty.

Debt Relief Guide

Before deciding on a debt relief company, you should understand how debt relief works, the pros and cons and all the options available to you. This guide will help you make the best decision.

What is debt relief?

Debt relief, also called debt settlement, is the overall reorganization or restructuring of your high interest debt when you are struggling to make on-time payments.

Debt relief companies will assist you in getting out of debt by negotiating with your creditors, but you may face negative consequences depending on your debt situation.

Some signs that you may want to consider debt relief include:

You’re late on or missing payments You’re having trouble budgeting for your payments You’re not making any progress on paying off your debts Your debts continue to accumulate You’re considering bankruptcy What is a debt relief program?

A debt relief program is a plan, usually created by a debt relief or debt settlement company, to help you pay off your debt by negotiating with creditors to get them to accept less than the amount they are owed.

How does debt relief work?

When you start the debt relief process, the company will generally instruct you to stop paying your creditors. Instead, you will pay the debt relief company directly and they will put your funds into a dedicated bank account.

As the money in the account accumulates, the debt relief company will begin negotiating with your creditors. Essentially, the debt relief company uses the fact you have stopped paying your accounts as leverage. Faced with the prospect of receiving nothing, the creditor will agree to accept a smaller amount paid from the dedicated bank account. Next, the creditor will likely close the account and it will appear on your credit report as “settled.”

Note: Debt relief companies can only charge you once the settlement terms have been established with the creditor and a clear path forward is laid out. They usually take 15-25% of your enrolled debt. While this percentage might seem high, considering a debt relief company can reduce your debt by up to 50%, it often ends up being less than your original debt amount.

Indeed, debt relief can be an appealing option to get out of debt. However, there are important downsides to consider.

Does debt relief hurt your credit?

Debt relief will almost certainly hurt your credit. Payment history is the biggest factor the credit bureaus consider when determining your credit score. When you stop paying creditors, you will be dinged for late and missed payments.

Also, if your creditors close your accounts, it will negatively affect your credit utilization ratio, which is the second most important factor in determining your credit score. Closed accounts marked as “settled” means the creditor had to alter the conditions of the initial agreement.

Debt settlement can also take months if not years. The entire time the company negotiates with your creditors, you will still incur late fees and likely receive harassing phone calls.

Finally, there is no guarantee a given creditor will accept a debt relief company’s settlement offer, which could lead to a debt collection lawsuit.

Differences between debt settlement and debt consolidation

Debt consolidation refers to the process of applying for a personal loan or balance transfer credit card with better rates and more favorable terms than your current debt structure. Your debts are then transferred to the new account and you make one monthly payment.

Debt consolidation simplifies your personal finances and will generally improve your credit in the long run if you keep current on payments and don’t incur more debt. With debt consolidation, you still pay the entire amount you owe, ideally in a shorter time with less interest.

Stop paying creditors and negotiate with them to take less than the full debt amount

High interest debts are combined into a loan or transferred to a credit card with a lower interest rate

15-25% of the settled debt

Interest rates vary. Some loans and credit cards have fees

It will harm your credit. Negative marks can remain on your report for years

Credit score can lower initially because of the hard pull, but if used responsibly, it can improve credit in the long run

You could pay less than you owe and eliminate debts

Save money on interest, simplify payments, improve credit score and financial health

There is no guarantee creditors will agree to the terms provided by the debt settlement company. Stopping payments and closing accounts could significantly hurt your credit score

You need average to good credit to qualify for the most favorable terms. Also, if you choose a credit card transfer, the APR could change after an introductory period

If you’d like to learn more about consolidation, check out Money’s debt consolidation guide.

Pros and cons of debt settlement

PROS

Pay less: If the debt settlement company is successful, they could negotiate an amount significantly less than you owe, even with their fees. Pay faster: With debt settlement, you can eliminate your debt more quickly than continuing to pay monthly minimums. Avoid bankruptcy: Bankruptcy arguably has more far reaching effects than debt settlement. Avoid lawsuits: If the creditor agrees to the terms the account will be settled, and they will cease legal action.

CONS

Credit score will drop: Late payments, missed payments and closed accounts marked “settled” can all significantly damage your credit and will last for years. Creditors may not negotiate: There is no guarantee your creditors will accept the debt relief company’s settlement, leaving you with more debt considering late fees and penalties, not to mention the potential of a lawsuit. Must keep up on payments: You must be able to make monthly payments to the debt settlement company to stay in the program. If you can’t, you will have to withdraw, leaving you in a worse place than you started. Scams: The debt settlement industry is rife with bad actors. Beware of guarantees of success and anyone who asks for money up front. Is debt relief right for you?

Because of its impact on your credit score and associated risks, employing a debt relief company is not for everyone. Getting a debt consolidation loan, a balance transfer credit card or working with a credit counselor or other debt management program is preferable.

However, if you are overwhelmed by debt, can’t keep up with payments and cannot secure a loan or credit card with a more favorable rate due to an already low credit score, debt settlement may be a viable option for you.

Below, we’ll discuss some of the alternatives to debt relief programs.

Alternative options to debt relief programs

There are several other options you should consider before employing the services of a debt relief or debt settlement service. Some of these will be less risky and less likely to negatively impact your credit score. In fact, many of them can have a positive effect in the long run.

These options include credit counseling, debt management, debt consolidation loans, negotiating with lenders yourself and bankruptcy.

Credit counseling

Credit counseling is usually provided by non-profit credit organizations that employ certified counselors in budgeting and debt management. You can use credit counseling to do more than just repair bad credit. Credit counselors can also help advise you on the best ways to improve your credit score and deal with your debt problems.

If you cannot get a debt consolidation loan, a credit counselor can help you discover what options are available to you. Credit counseling services may also include financial education workshops to help you learn how to manage your money, monitor your credit and budget more effectively.

If you are simply interested in credit monitoring, you could always try one of the best credit monitoring services.

Since credit counseling is often provided by non-profits, the initial consultation is usually free. Should you progress to a debt management plan, fees are generally minimal compared to other debt management options.

Debt management

A credit counseling agency may help you set up a debt management plan. This plan could involve the counselor negotiating directly with creditors on your behalf to lower interest rates, waive fees and minimize payments.

Unlike debt settlement, debt management plans involve paying the entire amount owed to creditors. However, because you’re making consistent payments, these plans typically don’t have a negative impact on your credit. In fact, a debt management plan will likely save you money and improve your credit in the long run.

Once you’ve agreed to a plan, you’ll pay the credit counseling agency a monthly fee. Depending on your plan, the agency will distribute your payment to the lenders. Your credit counseling agency may also take some monthly payments as a fee.

Debt consolidation loans

Debt consolidation is a type of debt relief that combines multiple debts into one loan. By consolidating your debts, you’ll likely only need to pay one monthly payment. Often, consolidation allows you to take loans and debts with high interest and pay them off with a lower-interest loan, allowing some relief and making repayment more manageable.

By consolidating your debt, you’ll end up paying the original amount you borrowed. A hard inquiry may temporarily affect your credit score, but it will not affect your credit score long-term like other types of debt relief. Making on-time payments and paying off your consolidation loan over time is one of the ways to improve your credit score.

Debt consolidation is a great tool to get out of debt, and you can use it to reorganize your debts even if you’re not facing severe issues. However, if you are facing serious debt problems, this may not be enough of a solution. Debt consolidation works best if you have a good enough credit score to get a loan with lower interest than your other debts and have enough monthly income to cover the payments.

For more information, check out our top picks for the best debt consolidation loans.

Negotiate with creditors

It’s possible to negotiate with each of your individual creditors. Essentially, you are doing the same thing as the debt settlement agency, only without the experience and negotiating muscle. It also requires determination, follow up and a lot of hard work on your part.

For starters, unless you are delinquent in your payments, chances are the creditor won’t be willing to cut a deal with you. If you are making minimum payments and being charged with late fees, you are their ideal customer because they could have you on the hook for years. As with employing a debt settlement service, a creditor will generally be willing to listen once you’ve stopped making payments to your account.

When you call the creditor, it’s a good idea to always be honest about your financial situation and why you are having difficulty managing your debt. They may initially be willing to lower your minimum payment or adjust your interest rate in your favor so they keep receiving their money. Although this could ease your financial burden in the short term, it may actually prolong the time you are in debt.

If, as with a debt settlement agency, you stop paying altogether, there is a chance the creditor will negotiate for a smaller amount just to make sure they receive anything at all. But also as with a debt settlement agency, there’s no guarantee the creditor will accept a settlement, and the missed payments and late fees will have a terrible effect on your credit score while you try to reach an agreement.

The upside to settling a debt yourself is you won’t have to pay a fee to a debt relief service. However, it takes time and effort that you may not necessarily have.

Negotiate with debt collectors

If a portion of your outstanding debt is delinquent and has been handed over to debt collectors, there may be an opportunity to negotiate them down to a lower amount. Debt is usually acquired at a significantly reduced value compared to its original amount. This presents an opening to engage with the collection agencies and find a middle ground between your initial debt and the price they paid for it.

You need to know your rights if you are being approached by debt collectors. Said rights have been established by the Fair Debt Collection Practices Act (FDCPA).

Request all pertinent information concerning your debt before making any payments. Once the details are confirmed, negotiate the payment amount and conditions with the collection agency until you arrive at a mutually agreeable arrangement.

It’s important to note that, while negotiating a reduced amount of debt is possible, this compromise will reflect on your credit history and could have a negative impact on your credit score.

For more information, check out our guide on how to negotiate with debt collectors.

Bankruptcy

Filing for bankruptcy isn’t something to take lightly. You can use bankruptcy to help with your debt problems, but it will have a significant impact on your credit report.

Most individuals file for either Chapter 7 or Chapter 13 bankruptcy. Each chapter has different ways to deal with your debt.

Chapter 7 bankruptcy is a common option if you need forgiveness for individual debts such as credit card balances or medical bills. In this process, your assets, including real estate and high-value material goods, may be sold — or liquidated — to repay creditors. If the value of your assets doesn’t equal or exceed the debt you owe, the remaining debt might be forgiven. However, Chapter 7 bankruptcy can remain on your credit report for up to 10 years, making it difficult to get any other forms of credit. Chapter 13 bankruptcy is another option if you’re looking for debt relief. Unlike Chapter 7, it doesn’t involve asset liquidation. Instead, it involves collaborating with the courts and creditors to establish a manageable debt repayment plan. The court supervises the plan’s execution, and once all payments are made, the remaining eligible debts may be discharged. Even though you’ll eventually pay off all of your debts, the bankruptcy will remain on your credit report for up to seven years. Chapter 13 is used by high-earning individuals or businesses with consistent income.
How to choose a debt relief program

Selecting a debt relief company requires careful consideration. Thorough research is essential, as even legitimate companies need to be vetted.

Beware of potential scams: Be cautious if a provider guarantees debt reduction or asks for upfront feeds before providing services; these are red flags.

When choosing a debt relief company, consider these factors:

Reputation and Accreditation. Legitimate debt relief or debt settlement companies will be recognized by the American Fair Credit Council (AFCC), so look for this accreditation on the company’s website or inquire with a representative. The AFCC is an organization that monitors and holds companies to the highest standards and also educates consumers on the subject of debt resolution. Customer Reviews. Review customer feedback on the BBB, Trustpilot and other trustworthy sites. Occasional bad reviews are typical, but consistent negative patterns signal concern. Assess how the company addresses complaints; active engagement and resolving issues indicate reliability. Fees. By law, debt relief companies cannot charge upfront fees. They can only charge you once creditors agree to the settlement. Avoid companies requesting money upfront. Verify fees and payment details before committing. Typically, debt settlement companies charge a percentage of the settled debt; confirm this with a representative in advance. Accessibility. How easy is the company to get a hold of? Given the impact a debt settlement program could have on your financial health, you should be able to contact the provider on the phone or through chat, email or text, and they should be responsive to your questions. It is also a bonus if they have an online dashboard where you can monitor your progress.
How to apply for a debt relief program

As debt relief comes in many different forms, applying for debt relief will depend on which option you decide to pursue. If you decide to get assistance from a debt relief company, your debt relief will depend on your eligibility for one of their programs. You can also try to get debt relief by consolidating your debts, speaking directly with your lender or declaring bankruptcy.

Debt Relief Companies FAQs

Are debt relief programs legit?Although debt relief programs can be legitimate, there are scams and fraudulent organizations present in the industry. Avoid any entity that offers guarantees or charges you up front. Only opt for a certified debt settlement company.
If a debt settlement company is following proper procedure, they will not charge you until an agreement has been made with your creditors and will be transparent about what you can expect from the process. Also, remember that a debt settlement plan will most likely have a negative impact on your credit score.
Does debt relief hurt your credit?

Debt relief can affect your credit depending on which type of relief you use. Filing for bankruptcy or using a debt settlement company can negatively impact your credit report. Alternatively, using debt relief methods such as debt consolidation may improve your credit if you make monthly payments on time.

How long does debt relief take?The length of the debt relief process depends on several factors, including the amount of debt you owe, the negotiation skills of the debt settlement company, and the willingness of your creditors to settle. As a rough estimate, debt settlement programs often take anywhere from 2 to 4 years to complete, though they can be as quick as 12 months in some cases.
Remember that during this time, you may have to deal with collection calls and potential legal actions from creditors, as well as negative consequences to your credit score.

What’s the best debt relief program?

The best debt relief program or company for you will be transparent about its practices and fees, and will work with you based on your specific needs. Consider our picks for some of the best options.

How We Chose the Best Debt Relief Companies

We analyzed the top debt relief companies available to support our recommendations. To decide which companies were best, we considered the following:

Costs: We chose debt relief companies that provide the best services for their given cost. Generally speaking, companies will charge 15-25% of the debt they settle for you. They cannot charge you anything up front by law, and only can begin charging once the creditor has accepted the settlement. We only considered programs that are transparent about their pricing structure and don’t trick you with hidden fees. Services and offerings: We favored companies that give you the most options when it comes to debt settlement. Most services will be able to work with credit card and unsecured personal loan debt, but it’s less common for them to offer help with medical bills, utility bills, rent and judgments. Third-party ratings: We looked at trusted third-party rating sites to determine how satisfied previous customers were with each service. We considered BBB accreditation and how likely the company was to respond to complaints in a productive way. We also considered the percentage of successfully closed complaints. Additionally, we took a look at other customer review websites specific to the debt relief industry in order to identify any pattern of similar complaints lodged against a given company. Customer support: We considered the accessibility and support each company extends to its customers. Debt settlement is a stressful process, and it’s made worse still if there is a lack of communication. That’s why we highlighted companies that were responsive to customers and offered multiple lines of communication including phone, email, text, and online form. Although no company offered live support 24/7, we favored those with longer hours of operation. Companies that offer the ability to track the debt settlement process via an online dashboard or mobile app fared well with us, too. Summary of Money’s 5 Best Debt Relief Companies of December 2023

Original: Money.com: 5 Best Debt Relief Companies of December 2023