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The Best Debt Settlement Companies of 2017

We have reviewed this category for 6 years. In the last year, we spent over 150 hours testing and reviewing, and we considered 15 services.

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Gold Award Winner 888-651-4344 Click to Call

Pros National Debt Relief has one of the higher amounts of average reduction after fees.
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Debt Settlement Review

Why Use a Debt Settlement Service?

The top performers in our review are National Debt Relief, the Gold Award winner; New Era Debt Solutions, the Silver Award winner; and Accredited Debt Relief, the Bronze Award winner. Here’s more on choosing a service to meet your needs, along with detail on how we arrived at our ranking of 10 systems.

Often in life, debt can seem overwhelming; credit cards, late payments, medical bills and overdue accounts can add up. If you find yourself swimming in debt and unsure how to escape, debt management services offer solutions. Many debt relief agencies offer assistance with medical debt relief, tax debt relief, student loan debt relief, credit debt relief and payday loan debt relief, some debt settlement companies even offer Christian debt relief services. However, these debt relief companies are not perfect, overnight fixes. Most negatively affect your credit, and with most programs, you still pay off the majority of your debt.

What these debt solution services can do for you is negotiate with your creditors in an attempt to lower some of your debt, or you may be able to consolidate your debt down to a single, monthly payment, preferably one with a lower interest rate than what you are paying with each individual creditor. There may be pros to debt management programs – especially if it is your last option before declaring bankruptcy – but you should understand what is involved and know what to expect from the process. For more information on debt and credit management options, have a look at our articles on debt settlement.

Debt Relief: What Are Your Options?

While there is some disagreement within the industry about what the best debt reduction services do, and which are legitimate and which are not effective, we have defined your options. Many are parts of larger processes, but in general, these are your options:

Debt Settlement: Settlement is the process of hiring a company to contact your creditors in the hopes of negotiating a lower amount. Typically, you set aside funds each month during debt settlement negotiation to pay your creditors once your debt settlement company successfully negotiates a lower balance. There is no guarantee of success with settlement, but companies cannot charge any settlement fees until at least a portion of your debt is successfully negotiated. Programs may take months up to four years to complete, and they will negatively affect your credit.

Debt Consolidation: Consolidation is the process of taking all of your debt and rolling them into a single payment by taking out a loan to pay off your creditors. Often, a debt settlement company will attempt to negotiate part of your debt to lower it before resorting to taking out a loan. The goal of consolidation is to have one low payment with a lower interest rate than you would experience with each individual creditor.

Debt Management Program: There are certain programs where a company creates a step-by-step plan to help you get out of debt by taking monthly payments from you and sending them to your creditors. Unlike settlement, payments are being made to your creditors rather than waiting until settlements are reached. This option of handling your debt does not have a negative effect on your credit as other methods do.

Bankruptcy: While this option is rarely recommended, it is still an option. With bankruptcy, you officially claim that you cannot pay your creditors what you owe them. There are different bankruptcy options, but you should use this option as a last resort due to its lasting effect on your credit. You must also qualify for bankruptcy and complete the entire legal process, including credit counseling and debtor education classes.

The New Rule: Legal Rules & Regulations

After seeing the abuse and unethical practices that were running rampant throughout a number of industries, the Federal Trade Commission (FTC) stepped in to create the New Rule, which set out regulations for a number of industries, including debt relief. The rules for debt resolution services and management explain what companies must and must not do.

Advanced Fees: No debt relief company or service may charge any settlement fee before settling your debt. It must settle at least part of one of your enrolled debts to charge you fees. This does not mean that it must settle all of your debt or part of your debt with all of your creditors. Once these conditions are met - the company successfully settles any part of your debt, you agree to the terms and you make a payment to the creditor - the company can begin charging you settlement fees.

Some companies charge monthly maintenance fees, which is a legal way to charge you fees prior to meeting those three conditions, so be wary of those companies. Most companies do not charge you anything upfront.

Legal Disclosure: All debt settlement companies must explain these elements of debt settlement to you before you agree to enroll in a program:

How much it will cost and all associated fees

How long the program will take, or a fair estimate based on your circumstances

How much money you must set aside to pay off creditors once settlements are made

Your rights with dedicated accounts, if applicable

The consequences of debt settlement and its negative impact on your credit

That you are still responsible for paying your credits, so you may receive late fees and be sent to collections

All of these companies must legally explain these to you. If a company fails to explain these elements and consequences of debt settlement, it is in violation of the law.

Truthful & Substantiated Claims: In short, a company cannot lie about its program, results or the effort it is making in negotiating down your debt. These should be standard practices in an ethical business, but the FTC has now ruled that making untruthful claims in this industry is against the law.

Debt Relief Programs: What Are the Risks?

Keep in mind that there are negative consequences and risks to debt settlement and other debt management options. As mentioned above, debt settlement will negatively affect your credit. While the effect is not as great as it would be if you were to declare bankruptcy, and it varies case by case, you can expect your credit score to drop if you choose a debt settlement program.

You may also see little to no results with debt settlement. Your creditors are under no obligation to negotiate or reduce your debt. Some creditors may find that receiving part of the debt is the better choice instead of nothing at all, but there is no guarantee. Further, those negotiating your debt have training and sometimes some sort of accreditation, but they have no more power than you do. You can negotiate your debt yourself, and many companies recommend you try contacting your creditors yourself first if your debt is not substantial.

If you choose to take out a debt consolidation loan, you run into the typical risks associated with loans, including affecting your credit and the potential of defaulting on the loan.

Finally, it can take months to years to complete a debt settlement program. Most companies advertise programs between two and four years. Combined with the fact that you are still responsible for your debt and any associated late fees, this may be much longer than you want to take to settle your debt. And if a company charges monthly maintenance fees, you may find yourself in even more debt.

Settlement Companies: What You Should Look For

When choosing a company to work with your debt, you want to find a company that is reputable and follows all laws set out by the FTC. If you speak with a company and it does not disclose all the information it is legally required to disclose, choose a different one.

Look for a company that can reduce your debt the most while charging you the least. Depending on the company's settlement program, some charge fees based on the amount of debt you enroll in the program while others charge a portion of the amount of debt they settle for you. Generally charging you a portion of the settled debt is preferable because it is a smaller amount than the total debt.

For example, imagine you have $10,000 in debt. If a company charges 30 percent of your enrolled debt, you pay $3,000 in settlement fees no matter how much debt is settled. If a company charges 40 percent of your settled debt, the amount you pay depends on how much is settled. If it settles 60 percent or $6,000 of your $10,000 debt, leaving you responsible for $4,000, you pay 40 percent of the $6,000, or $2,400. This means that although 40 percent looks larger, you pay less than a company that charges 30 percent of your total debt. We calculated your estimated fees based on each company's means of charging you fees to give you a better idea of what to expect.

Look for a debt resolution service's accreditations. There are not government debt relief programs or accreditations for this industry, just laws the companies must follow, but there are entities within the industry that promote proper practices. These are three accreditations we consider important for companies to have:

The American Fair Credit Council (AFCC) replaced what was formerly known as the TASC and promotes compliance to the FTC's regulations.

The International Association of Professional Debt Arbitrators (IAPDA) provides training and certification for debt negotiators. This means those who are IAPDA certified have professional training in debt management and settlement. It also promotes best practices and compliance with the FTC.

The United State Organization for Bankruptcy Alternatives is also not a government agency but was started by professionals within the industry. This agency monitors companies within the industry to ensure they follow legal regulations.

Finally, look for what resources and education a company offers. It is no lie that any company can offer to negotiate your debt, so the best debt settlement companies are those that offer solutions to manage your finances and stay debt free after a program is complete, going above and beyond to help you avoid that same situation in the future.

What We Evaluated: What We Found

Debt settlement programs have many requirements that must be met before you begin the process. Because of these requirements, including required debt minimums, submitting personal identifying information and the program's detrimental outcomes on your credit history, our reviewers were not able to test the debt settlement process itself.

While we could not directly test the debt settlement process, we interacted with each company and determined other factors that are important in addition to the direct steps in the settlement process.

Various factors, including your personal financial situation, go into which company you select. The following criteria are what we determined to be the important additional factors for selecting a debt settlement company. These programs can take years to complete and require a good amount of dedication, so it is important to get all the information up front before you sign any contracts.

Transparency is a huge factor when selecting a debt settlement program. Before selecting a company, it is important to know its practices and business history. Additionally, due to the New Rule, there are specific things a company must legally disclose to you.

As a rule, companies should never make promises to stop collectors from calling you, as collectors and debt agencies are within their rights to contact you and may not stop when you enroll in a program, though this contact is regulated as well. Companies should also never make promises that they can reduce your debt completely or in a very quick time frame. Additionally, a company should never pressure you to give up your personal information, such as your account numbers, before you sign on.

Legally, companies must never charge upfront fees and must disclose certain information about the length of the program, the amount it will cost and the negative effects that a program will have on your credit score.

In our tests, we contacted each company over the phone and via email, when it had an email address listed. We asked specific questions about the requirements for a program, including how much the program would cost. We asked if we would have to pay anything upfront or pay monthly fees. We also asked about companies' abilities to stop collectors from harassing us once in a program. Finally, we observed whether agents tried to push us into giving them personal information during the consultation.

In our tests, we found New Era Debt Solutions to be highly transparent. Our questions were answered honestly, and the information the reps provided was consistent. Furthermore, the New Era website has a complete section dedicated to explaining its processes and the FTC regulations. While many companies "brag" that they don't offer upfront fees, they fail to mention that it is illegal to require these fees. New Era stands out because it clearly explains the FTC regulations and does not try to hide its compliance with the New Rule.

Customer Service & Resources
Many companies offer a personal advisor who works on your account as long as you are in the program. Personal attention is especially important due to the length of the program and the amount of money and dedication you are putting into the program.

In our tests, we evaluated how completely the program was explained and whether other options were presented as a solution. While debt settlement can help people get out of debt, it should never be presented as the only solution. We also looked for companies that clearly explained bankruptcy, the different kinds of bankruptcy and their effects on your credit.

Pacific Debt scored exceptionally well in customer service. Representatives were polite and did not push us for information. Moreover, when they did not know the answers to our questions, they quickly sought out answers and got back to us.

Because of the length of the program and amount you dedicate to it, it is important to learn as much as you can about a debt settlement program before enrolling. Look for companies that strictly adhere to the FTC regulations and offer consistent customer service.

Our Verdict & Recommendation

In our tests, National Debt Relief, New Era Debt Solutions and Accredited Debt Relief rose above the competition because of their consistent transparency, customer service and services offered. While these best debt relief companies have earned out top three spots, other companies we evaluated had standout features of their own.

Premier Debt Help and Superior Debt Relief Services each charge a percentage of the settled amount of debt rather than your total enrolled amount. Additionally, Curadebt focuses on debt management plans instead of debt settlement specifically. This means it can counsel you on other options than just debt settlement.

No matter which debt relief agency you choose for your debt relief program, it is important that it consistently follows FTC regulations and that it is willing to provide you information about the program before asking for personal account information. It is in your best interest to pick a company that will work with you through the long and trying debt relief process.