Debt can be good, but many individuals struggle with it at some point in their life. Taking on too much debt can affect your credit score, leave you feeling overwhelmed, and force you to use debt relief services.
Debt settlement is one of the options available. The information below is meant to provide insight into the different debt settlement companies available and an overview of how debt settlement works.
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1. National Debt Relief
National Debt Relief is an accredited debt relief company based in New York, NY. They offer numerous debt settlement services for individuals struggling with out-of-control debt and they are one of the nation’s largest debt settlement organizations.
National Debt Relief offers a free consultation with a certified debt specialist — all you need to do is apply online. The specialist will analyze your credit history, determine eligibility, and create a plan of action for debt settlement accordingly.
National Debt Relief even backs its settlement program with a money-back guarantee. They provide the following information surrounding their debt settlement program:
- Types of debt settlements: Unsecured debt;
- Fees: 15% to 25% of the borrower’s enrolled debt;
- Program length: 24 months to 48 months;
- Accreditation: American Fair Credit Council (AFCC), International Association of Professional Debt Arbitrators (IAPDA), and Better Business Bureau (BBB).
2. Accredited Debt Relief
Accredited Debt Relief is a debt relief company based in San Diego, CA. Their site indicates the following primary goals:
- To reduce the total amount that borrowers owe;
- To settle debt quicker than borrowers could pay it off on their own.
Accredited Debt Relief offers free consultations with a certified debt specialist who helps the organization better understand your credit history and financial situation. Simply apply online to get started.
Accredited Debt Relief’s website states that the ideal candidate is someone on the verge of bankruptcy with more than $10,000 in unsecured debt. The company offers a money-back guarantee. Accredited Debt Relief provides the following information on its debt settlement program:
- Types of debt settlements: Unsecured debt;
- Fees: 15% to 25% of the borrower’s enrolled debt;
- Program length: 12 months to 48 months;
- Accreditation: AFCC and BBB.
3. DMB Financial
DMB Financial is a debt relief organization located in Beverly, MA. Their site explains that they work with creditors on your behalf to restructure the amount that you owe, and the deadline for payment.
DMB Financial allows those struggling with debt to apply by contacting them directly at (833) 998-0929, or you can fill out a form online. Once you apply, a certified program consultant will analyze your financial situation and credit history to determine the best settlement option for you.
DMB Financial provides the following debt settlement program information on their site:
- Types of debt settlements: Unsecured debt;
- Fees: Not provided;
- Program length: 36 months to 48 months;
- Accreditation: AFCC, BBB, and IAPDA.
4. New Era Debt Solutions
New Era Debt Solutions is a debt settlement company based out of Camarillo, CA. Unlike other settlement companies, New Era Debt Solutions employs attorneys to ensure that the entire process is completed according to both state and federal laws.
New Era Debt Solutions offers a simple online form to determine if you are a good fit for the program. If you are approved, a debt specialist will reach out to you about the next steps.
New Era Debt Solutions’ website explains that their average debt settlement program takes 28 months. They offer the following settlement program information:
- Types of debt settlements: Unsecured debt;
- Fees: 14% to 23% of original debt amount;
- Program length: 36 months to 48 months;
- Accreditation: AFCC, BBB, and IAPDA.
5. CuraDebt
CuraDebt is a debt settlement company located in Hollywood, FL. CuraDebt not only offers settlement programs for unsecured debt, but also for consumers who owe on their taxes.
CuraDebt offers a free consultation service on their site and you can see if you qualify for their program in as little as one minute. If you are approved, a debt specialist will approach you about what is next.
Note that CuraDebt does not offer its program in all 50 states. Their site provides the following information surrounding its debt settlement program:
- Types of debt settlements: Tax debt, unsecured debt, and certain secured debts;
- Fees: 20% of the borrower’s debt savings;
- Program length: 24 months to 48 months;
- Accreditation: AFCC and IAPDA.
6. Freedom Debt Relief
Freedom Debt Relief is a debt relief company based out of San Mateo, CA, and Phoenix, AZ. Something that sets this organization apart from others is its interactive platform. Once you are approved for their debt settlement program, you can track the following on the Freedom Debt Relief dashboard:
- How much you have saved;
- How much you owe;
- Any negotiations between the debt settlement organization and the creditor.
You can apply online for free on the Freedom Debt Relief website. A debt specialist will analyze your debt to determine if you are a good fit for the organization. If you are, the debt specialist will reach out to you to plan out the best route for your debt settlement. Freedom Debt Relief offers the following debt settlement information on their site:
- Types of debt settlements: Unsecured debt;
- Fees: 15% to 25% of the borrower’s settled amount;
- Program length: 24 months to 48 months;
- Accreditation: AFCC and IAPDA.
7. Pacific Debt Inc.
Pacific Debt Inc. is a San Diego, CA-based company that offers debt settlement programs. Their site explains how they aim to reduce borrowers’ debt while providing them with a monthly plan that works for them.
Pacific Debt Inc. provides a simple online consultation form at no cost. Simply apply online and if you are approved, a debt specialist will contact you to tell you about the specifics of the program. Pacific Debt Inc. provides the following information on their site about their settlement program:
- Types of debt settlements: Unsecured debt;
- Fees: 15% to 25% of the borrower’s enrolled debt;
- Program length: 24 months to 48 months;
- Accreditation: AFCC, BBB, and IAPDA.
How Does Debt Settlement Work?
Debt settlements function when a creditor agrees to accept less to resolve a borrower’s debt than the amount that they owe. Debt settlement programs are offered by debt relief companies like the ones listed above.
Typically, when a borrower utilizes a debt settlement program, they will stop paying towards the debt to prioritize payments that are placed in a separate account.
Once the debt settlement company decides that you have put enough money aside to make a case, they will begin negotiations with the borrower’s lender to restructure the debt amount, and the timeline for payment.
Debt Settlement vs. Debt Consolidation
Debt settlement and debt consolidation are mistakenly used interchangeably, but the two respective processes differ.
Both financial strategies are used for managing debt, but debt settlement companies focus on reducing the total amount that you owe while debt consolidation companies focus on reducing the total number of creditors you owe.
Debt Settlement Advantages and Disadvantages
There are different factors that borrowers should consider before applying or signing across any dotted lines.
- Advantages:
- If your debt is settled, you may pay less than your original debt amount;
- If your debt is settled, you may receive a more practical payment timeline;
- If your debt is settled, it can help you avoid bankruptcy.
- Disadvantages:
- Your creditor may not be willing to negotiate your debt;
- You may accumulate multiple late fees or settlement organization fees even if your debt is not settled;
- The debt settlement process could lower your credit score — at least initially.
The primary advantages and disadvantages depend almost entirely on whether your debt is settled. Like most financial ventures, there are risks involved. But if your debt is consuming your life, debt settlement could be your best option.
Considerations for Choosing a Debt Settlement Company
If you have chosen to pursue debt settlement, be sure to do your research surrounding debt settlement companies. Review the following considerations before choosing to work with a debt settlement company:
- Requirements: You want to make sure you aren’t spending time working with an organization that can’t help you. Look at the different types of debt that the organization works with, any minimum debt requirements, and any other eligibility requirements behind a program;
- Fees: Pay close attention to the fee ranges offered by the organization. If there are no fees, this could be a red flag. It should be noted that some settlement companies charge fees based on your total debt and others charge fees based on the total debt that was reduced;
- Accreditation: Accreditation agencies require organizations to meet specific standards to protect consumers. Be sure to check a debt settlement organization’s accreditation and the accrediting agency.
- Transparency: Good settlement companies will be very clear about their programs. If a site makes bold promises, or they are leaving important details out, this should raise red flags;
- Customer reviews: As always, it’s a good idea to research the experiences of past customers for insight into a specific organization or program.
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