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Personal Finance

Best Debt Settlement Companies

Debt settlement companies work to reduce your debt through a process of negotiation with your creditors. Before choosing to work with a particular company you need to understand the process, advantages, disadvantages, and costs associated with each provider.

In short, debt settlement involves negotiations with a creditor in which you offer them significantly less than what you owe on your debt. If you have a medical bill of $10,000 that is long past due, for example, you could offer the creditor a payment of $5,000 or $7,000 to settle the debt. In order to get the account closed and recoup at least some of their money, they may accept that payment and consider the account paid.

You might think you’re struggling alone, but you aren’t. In fact, as of May 2018, the total consumer debt in the United States was at $3.89 trillion—up 7.6% from the year before and reaching an all-time high. Credit card debt makes up one-third of that, at over $1 trillion, with student loans totaling another huge $1.5 trillion chunk. No, you’re by no means the only one who feels burdened by their debt.

You can negotiate these settlements yourself, but there are also debt relief companies who can handle these arrangements for you. We’ve compiled a list of some of the best debt settlement companies you can work with.

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Best Debt Settlement Companies

Freedom Debt Relief

  • Freedom Debt Relief (FDR) is one of the most well-known and highest-rated debt settlement companies in the industry. It has resolved over $10 billion in debt for more than 600,000 consumers since 2002 — more than any other company in the U.S.
  • FDR charges between 15% and 25% of the total debt in order to settle, but you won’t pay anything until you get a valid settlement offer and approve the offer. Please note, your fees may vary depending on your state of residency and the amount of debt you enroll.
  • FDR offers a debt relief plan that could get you out of debt in as little as 24-48 months.
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National Debt Relief

  • This company is rated #1 by Consumers Advocate for debt relief and can reduce your total debt by as much as 50%, putting you in a much better position.
  • ​They can negotiate on all unsecured debt, including medical bills, collections, business and student debt, and others.
  • NDR does not charge upfront fees and charges 25% of your total debt at the time of settlement.
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  • CuraDebt, located in Florida, offers debt settlement with a twist—they also investigate and identify violations of your privacy and rights on the part of creditors and collectors. If they’ve violated the law while pursuing you for payment, you could get your debt dismissed.
  • ​The company charges 20% of the total debt, but there are no upfront fees.
  • In business since 2000, member in good standing of AFCC.
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New Era Debt Solutions

  • New Era is another leading debt settlement company, and while they don’t publish their fees on their website, they do point out that there is nothing you need to pay upfront.
  • ​If they cannot help you, they won’t take your case.
  • They’ve settled over $200 million since their inception in 1999.
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  • Debtmerica, headquartered in California, offers attorney-based debt settlement, charging 20% to 24% of the total accounts being settled.
  • ​They add their fees to the settlement agreement, meaning you don’t pay anything until the end of your interaction with them.
  • They advise that settlements take four to six months to begin working.
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How to Choose the Best Debt Settlement Company

Before choosing a debt relief company to work with, ask questions, such as how long they’ve been in business and how much debt they’ve successfully settled. You should also check their rating with TrustPilot or Better Business Bureau and take the time to read customer reviews.

Also ask how long their program will take, and get a clear number on what fees are charged—and when. Don’t do business with a company that charges fees before any settlement is reached.

Debt settlement is a big decision; if you choose to take that route, understand how it can help, what’s expected, and where to go from here.

Not everyone qualifies for debt settlement, and it only works with certain types of debt. In most cases, federal, state, or local taxes cannot be included in any debt settlement program; some companies, however, do offer advice on how to help with taxes owed.

Car loans, mortgages, and other debt that is secured by an asset also can’t be included in a settlement; in these cases, the lender or servicer will repossess or foreclose on the asset in question if the balance becomes too far past due. In addition, if your creditors have already secured a civil or default judgment against you, debt settlement is not something that can help you. In that case, you should contact a bankruptcy attorney.

If you have any of the following kinds of debt—and especially if most of your debt falls into these categories—you may find debt settlement to be an actionable option.

  • Credit cards
  • ​Health care debt
  • ​Lines of credit
  • ​Personal loans
  • Department store cards


Debt settlement has several advantages that can cut both your balances and your stress and anxiety level. You could end up having to pay 50 to 75 cents on the dollar for each debt and, depending on how much you can save each month toward your settlements, you could be out from under your debt in two to three years. You maintain control of all of your settlement funds and can choose to accept or decline any settlement offers that you receive as a result of the debt company negotiations.

Once you take care of the debts through settlement, you can avoid bankruptcy and start fresh without those debts looming over your head.


Debt settlement is not an easy process. In order to settle your debt with your creditors, you need to stop making payments to them. This gives your debt settlement company negotiating power when they reach out to your creditors, and it proves to your creditors that you’re unable to repay the full amount on your debt.

Choosing to stop your payments also lets you start saving money in an account that your debt settlement company sets up for you (and you control). Once you have enough in the account to settle with a creditor, the debt settlement company can negotiate on your behalf.

However, while you’re waiting for that balance to be sufficient, you will see the adverse effects of late payments on your credit score and will probably receive calls from creditors. You will also be subject to penalty interest rates.

Some creditors may even refuse to work with settlement companies at all, and you may not know this until you’ve already stopped making payments toward your bills in an effort to save money for the settlement. In a worst-case scenario, you could see a balance go into civil judgment, and that can also adversely affect your credit.

Finally, since most settlement companies charge between 18% and 25% of the total debt, a settlement that allows you to pay off 75% of the original debt won’t save you much money in the long run — but it will have negative effects on your credit for years to come.

Alternatives to Debt Settlement

There are still other things you can do, even if you decide not to use a debt settlement company. You can always contact the creditor yourself and negotiate a settlement; in some cases, if you have the lump sum available, you can offer them 50% or 75% of the balance. They may or may not choose to accept it, however — many creditors are unlikely to engage in settlement negotiations if you are current on your payments, even if you’re only paying the minimum amount due.

You can also look into consumer credit counseling, which is a program in which your counselor helps you work out not only a payment arrangement with creditors who will allow it, but also helps you set up a budget going forward in an effort to help prevent future issues and encourage responsible money habits.

Your local bank or even an online lender may help with a debt consolidation loan as well, which can help you get debts paid off while making only one payment. If all else fails, you can also look into bankruptcy if you need to start over. There’s no easy answer; all of those options will adversely affect your credit.