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Best debt settlement companies 2020: Debt relief companies rated

If your debt is starting to get hard to manage and you are struggling to meet the monthly repayments then debt settlement could be an option for you. 

Debt settlement is a big decision that no one should make without doing some research. It's important to inquire after the not just the pros but also the cons, including the serious damage entering into debt settlement could cause to your credit score.

We strongly encourage that you entertain the idea of debt settlement only once you have explored all other options. The good thing is that the providers we've highlighted in this list should offer you debt counseling and debt management advice without requiring you to pay anything upfront or sign up to a deal.

What is debt settlement?

Key points: 

Top debt settlement provider

National Debt Relief is our top pick of debt settlement providers. As well as providing debt settlement, their debt councilors will also help you understand your debt management options.VIEW DEAL ON National Debt Relief

  • Make sure debt settlement is the best option for your circumstances
  • Debt settlement companies should NEVER ask for a fee in advance
  • Debt settlement can damage your credit and even land you in court
  • Debt settlement can take a long time
  • There is no guarantee your debts will be reduced (but it is likely)
  • Debt settlement companies should explain other options for clearing debt
  • Some creditors refuse to work with debt settlement companies

Debt settlement is a type of debt relief. Other options to manage your debt include debt consolidation loans or balance transfers, and we encourage you to explore those options first.  

By entering a debt settlement program, you agree to have the debt settlement company negotiate with creditors on your behalf and is not something you should go into lightly. 

Entering a debt settlement agreement means that you will not be paying your creditors on time. This could then mean debt collections agencies getting involved, but the most reputable debt settlement companies will allow you to change your contact details to theirs so that they can explain the plan you have taken out. However, expect this to lower your credit score until your debts are settled in full and you can return to making regular payments to any further lenders. 

There are also no guarantees. Some creditors may not be willing to negotiate your debt, or the final settlements may not add up to a total debt reduction when you add the debt settlement company's fees to the final amount.

That said, in the majority of cases overall debt can be significantly reduced and restructured in a way that makes paying off your debts less of a struggle. That means you could find yourself better off financially in both the long and short terms. If you take advantage of the education or money counseling services offered by these services, then you may also be able to rebuild your credit and start again with a clear understanding of how to keep your finances stable. 

All debt settlement companies should offer a free phone call to offer advice so that you can fully understand the implications of a debt settlement agreement and, by law, no company is allowed to ask for a fee in advance.

1. National Debt Relief

National Debt Relief - best debt settlement company overall

(Image credit: National Debt Relief)

National Debt Relief

Best for high amounts of debt and comes with excellent customer feedback

Short program options
Solid average reduction rates
Great customer ratings
Minimum debt amounts vary by location

Based on our research and experience speaking with its representatives, National Debt Relief is our choice for the best debt settlement program.

It has been in business for over five years and is AFCC accredited. This accreditation means that, among other things, its staff receives extensive training to establish the best debt resolution option for customers' needs.

Generally, the company deals with customers who have over $20,000 in debt to their name. NDR claims it achieves an average reduction of around 50%, which is a little lower than the average range for the sector, but this figure varies depending on your circumstances and the companies your credit is with. It charges fees that fall well within the industry average, standing at between 15% and 25%, which you'll need to add to the reduction.

Its customer service is very well regarded, though it doesn’t provide you with a single contact – you speak to any available customer service agent. However, this means you don’t have to wait as long to speak with someone or for someone to get back to you if you have a question.

National Debt Relief is admirably transparent about the risks associated with entering a settlement program. During your first call, it makes recommendations based on your financial situation and in some cases recommends you contact a credit counseling company or get a debt consolidation loan instead.

We found it to be one of the most transparent debt settlement companies we reviewed, and also found the advice offered excellent, which is why it tops our list.

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2. Freedom Debt Relief

Freedom Debt Relief best debt settlement companies

(Image credit: Freedom Debt Relief)

Freedom Debt Relief

Some of the lowest prices on the market

Average fees
Variable program lengths
AFCC accredited
Only available in 37 states

With a broad range of industry accreditations, Freedom Debt Relief is a company that can help customers who are struggling to pay back a wide range of unsecured debts, including credit cards, loans, and store cards. 

Things to note are that the company currently operates in 37 states and charges an average of 22% of the enrolled debt as a fee for settling. Freedom has been in operation for over 17 years and settles a whopping 50,000 accounts each month.

Also, it has an average minimum debt requirement of $7,500. Importantly, the staff are knowledgeable about the options on offer for clients, depending on their circumstances.

If you’re thinking about becoming a potential customer Freedom offers a free consultation, so you can work out if debt settlement is the right solution for you. These are usually carried out over the phone with an IAPDA-certified consultant. This means you will receive expert information and a good idea of whether debt settlement is the best move for you. The service is suggested for customers who are struggling to meet minimum payments on a monthly basis, and who are looking to avoid bankruptcy.

Freedom is one of the best debt settlement companies around.

Freedom Debt Relief best debt settlement companies

3. Accredited Debt Relief

Accredited Debt Relief best debt settlement companies

(Image credit: Accredited Debt Relief)

Accredited Debt Relief

Best for multiple creditors

12 and 48 month programs
Works with a wide range of partners
Only available in 32 states
$7500 debt needed before enrolment

Accredited Debt is essentially a broker for debt settlement companies. It takes a full look into your finances, including who your creditors are, to link you to settlement agencies that have the best chance of getting you a resolution.

It is a niche product in that it does not tackle your debt directly but instead has a list of negotiators that it works with. This could wield more results than a general firm so if you have a lot of unsecured debt with different providers this could be a good option.

There are some requirements, such as a minimum of $7500 in debt and it will expect you to hand over all of your high balance credit cards leaving you with just one in case of an emergency, usually the one with the lowest limit or under $500.

Once a contract is agreed the company will start to make contact with your creditors and settlements begin from as little as four to five months depending on the amount owed. However, the company does only operate in 32 states.

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4. Guardian Debt Relief

Guardian Debt Relief best debt settlement companies

(Image credit: Guardian Debt Relief)

Guardian Debt Relief

Infinitely good value

AFCC and IAPDA accredited
Knowledgeable staff
Not available nation-wide
May take longer than expected to complete

Guardian Debt Relief tends to work with clients who have more than $10,000 in debt and help by negotiating a settlement agreement with creditors once your new settlement account has enough funds.

When you first ring you will go over your financial situation with an advisor and timelines will all be worked out before any paperwork is signed. The plans are custom-made for individuals and usually work to around 20% in charges of the total settled debt.

With large debts, the company has managed to reduce the amount by around 50% before fees, so there could be a significant saving involved. However, for more moderate amounts of debt the total debt settled tends to be between 30% to 40% lower than the original amount.

Guardian also charges an average monthly fee of $200, which will likely be put into your settlement account to go towards your final payments. The company has a standard minimum debt requirement of $7,500.

It is worth knowing that the service is not available in every state, so do check ahead of calling to make sure it operates where you're based. However, as a company, it does tend to have lower than average fees, and good settlement rates. It also has an approach that promotes education and getting people's financial lives back on track.

5. New Era Debt Solutions

New Era Debt Solutions

(Image credit: New Era Debt Solutions)

New Era Debt Solutions

One of the most transparent companies

Low fees
Dedicated case handler
Customer service can be slow
Not available in Iowa, Maine, and South Dakota

With New Era Debt Solutions each client is assigned a personal account representative, who will work with them to find the right way to reduce their debts. However, programs with the company last around 28 months on average, with the range going from 12 to 48 months depending on people's circumstances.  

There are some stipulations though, for instance the company does need each of the accounts you entrust it with to have over $750 worth of debt associated with them. This is a low minimum amount, making it a good option if you have a number of smaller debts.

The fees charged by New Era are lower than the industry average. There is also a low minimum debt amount for each loan. This means the services are available to a wide range of people with varying financial histories. The services are available in 47 states, making the company geographically very available too.

The fees charged for the service vary between 14% and 23% of the amount of debt you enroll in one of their programs. The average amount of debt the company is able to save for clients is 53%, which means that after fees are paid customers generally end up paying back 30% less than they would have without engaging New Era for debt settlement arrangements.

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6. Pacific Debt Relief

Pacific Debt Inc

(Image credit: Pacific Debt Inc)

Pacific Debt Relief

Best for maximum settlement

Quick response times
Dedicated case handler
Only available in 32 states
Slightly higher fees than average

Pacific Debt Relief offers each client a personal account representative, who will work with them to find the right solution to reduce their debts and ease the stress of monthly repayments

In order to work with Pacific you need to have a minimum total debt amount of $7,500, and each of the accounts you entrust the company with will need to have over $750 worth of debt associated with them. This is a low minimum amount for each account, making it a good option if you have lots of smaller debts.

The fees they charge for their service are average and vary between 15 and 25%. Customers are generally able to pay back 50% of the debt they initially owed after negotiation and before fees are taken.

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7. DMB Financial

DMB Financial

(Image credit: DMB Financial)

DMB Financial

Best for reputation

Helpful staff
Solid reputation
Only available in limited locations
Higher than average fees

DMB Financial has been in business for 14 years, and has saved $1bn in debts for its clients since its start. The company's service is available in 26 states and is AFCC and IAPDA accredited. Fees can be a little above average, depending on your credit history, but the company does have links with some of the most well-known providers. 

DMB Financial charges an average fee of 21.5% of the total settled debt. This means that when you pay off your loans or credit cards at the lower rate it negotiates for you, you will need to add on the fee that is paid for the service. This may be more or less than the debts you were due to pay. As per the legal requirement, there are no upfront fees, which is the industry standard.

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8. Premier Debt Settlement

Premier Debt Settlement

(Image credit: Premier Debt Settlement)

Premier Debt Settlement

Best for short term solutions

Nationwide scheme
Short program options
Not AFCC or USOBA accredited
Customer service can be slow

Premier offers programs that last as little as 12 months, depending on your overall amount of debt. If you’re looking for a short-term solution then this could be a good company to work with. When you call Premier to discuss your options they will go over your finances and assess whether or not settlement would be right for you.

Premier has an overall debt minimum of $5,000, which is on par with the industry average. The range of options makes Premier an attractive option if you think you are looking to clear your debt quickly. The options suit both people with a number of smaller loans, or credit card debt, as well as those with a couple of larger loans.

The great news about this company is that it is available nationwide and charges fees that fall in line with the industry average. There are no upfront fees to consider, and the amount you will pay is calculated based on the total amount of debt settled through the company. The settlement fee stands at 20% of the debt you enrol, so you will need to take that into consideration when you find out how much it could have saved you.

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National Debt Relief is the best debt settlement solution providers. Customer service and debt negotiation are provided in-house, and its average rate of debt reduction is the highest we've found.
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Scam debt settlement companies

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Beware of debt settlement scams

Debt settlement has its pitfalls. There are many scam debt settlement companies out there that can make an already difficult situation worse, instead of better. We’ve made sure that all the providers on our list of the best debt settlement companies are transparent and upfront with customers about the risks involved with these programs. They all also follow FTC regulations that prohibit advance fees. 

Most importantly, the final settlement of your outstanding debt often relies on the type of relationship that the settlement company has with your creditor. So be prepared to do your research, look at the debt settlement company accreditation and don’t be afraid to ask questions. We've done as much of the hard work as we can for you, and the companies below represent some of the best debt settlement firms on the market. However, everyone's situation is different so make sure you ask specifically about the relationships the settlement company has with your specific creditors.

How a debt settlement program works 

A debt settlement program can take between two and four years. It’s a long process with many steps. Here’s a breakdown of the entire process.

Initial consultation

When you call a debt settlement company on our list, you’ll speak to an IAPDA certified debt specialist. They’ll go over your debt situation – whether you’re current on your payments, how much debt you have and how much you’re paying each month. Often they’ll do a soft pull on your credit to look at your individual creditors and how much you owe each of them.

Sign up and enroll

After you’ve agreed to start a program, the settlement company will evaluate your finances and figure out how much you can afford to put toward the program each month.

Stop paying creditors and make deposits

For a debt settlement plan to be effective, you’ll need to stop paying your creditors and deposit funds into the escrow account set up by the settlement company. These are the funds that will make up the settlement offers the debt relief company will make to your creditors.

Settlement company begins negotiations

After about six months the settlement company will begin negotiating with your creditors. They’ll make settlement offers and notify you if a settlement offer is accepted. The best settlement companies offer client portals that allow you to track your funds and settlement offers.

Pay the creditors (and the settlement companies)

Once your offer is accepted you’ll transfer the money from your account to your creditors. You’ll also pay the settlement company. Since 2010 the settlement industry has moved away from advance fees. You’ll pay a certain percentage of the debt they successfully settle. The amount varies depending on the state you live in, since some states have caps on the percentage they can charge.

How much does debt settlement cost? 

The fee you pay a debt relief company is a percentage of the debt you want it to settle for you. Some states put caps on that percentage, but in general we saw a range of 15% to 25%.

One thing to note is that this is on top of what you pay your creditors. For example, if you settle $30,000 of debt for around $12,000 and the debt settlement company takes a fee of 20% on that debt, you’ll pay an additional $6,000 to the settlement company. So instead of saving 60% of your total debt, you’ll save 40%. It can still be worthwhile, but make sure to include the fees in your savings projections.

Another thing to keep in mind is that your debts are going to continue to accrue interest. It’s likely that because you stop making payments, you’ll late fees and penalty interest rates may also be added. In our interviews with debt settlement companies, they assured us that your monthly payment accounts for penalty rates and late fees.

In some cases they may be able to reach a settlement before you have enough to pay the settlement company’s fees. The settlement companies we interviewed all offer flexibility in these situations, letting you divide your payment into monthly installments.

How to settle debt yourself 

You can settle debt yourself, without the assistance of a debt settlement company. In fact, some creditors refuse to work with settlement companies. However, it can be time-consuming to negotiate for yourself and may not be the best option if you have a lot of creditors to settle with.

DIY debt settlement follows a similar process to settling with the help of a company. You stop making payments and start saving up with the goal of making a discounted payment on your entire debt amount. To settle your debt, you need to be at least 90-days delinquent on your payments. The longer you’ve missed payments, the more likely your creditors will settle. After five months, your creditors will send your debt to collections agencies, which may make them more willing to settle with you.

Creditors typically prefer lump-sum payments, though in some cases you may be able to negotiate a reduced-cost payment plan. Also, it may be easier to negotiate a settlement if you’ve had a hardship like losing your job or a medical problem that keeps you from making regular payments. 

Another reason to negotiate your own settlement is you won’t have to pay fees to a settlement company. Debt settlement companies take 15% to 25% of the amount you settle – if you use a company and settle for $10,000, you’ll also pay up to $2,500 in fees.

No matter how you settle your debt, it will hurt your credit. Late payments show up on your report no matter what you do, but when you negotiate, try to get your creditors to mark your debt as “Paid as Agreed” rather than “Settled.”

Is a debt consolidation loan a good option? 

Another common option for dealing with debt is a debt consolidation loan. This is a personal loan you use to pay off your existing debt. By combining all your debts into one loan, you only have one monthly payment and one interest rate. You can find a debt consolidation loan through a bank or another lender. Some debt settlement companies also offer debt consolidation loans or work with third parties if they find a consolidation loan is the best option for you.

To be eligible for a consolidation loan, you need good credit. Lenders won’t approve loans if you have a score below 630, and you typically need a score of 720 or above to qualify for the best rates. Rates usually range from 13% to 30%, though you’ll end up saving some money since you only pay interest on one loan.

If you have poor credit and are worried you may not be approved for a loan, you can try to find someone to co-sign with you. Getting a co-signer increases the likelihood of getting approved, and if they have good credit, your loan will have a better rate. Keep in mind that a co-signer is also responsible for your loan, so if you miss payments, it affects their credit.

Another option for debt consolidation is a balance transfer credit card. Like a loan, you move existing balances onto one card with a single interest rate. As a bonus, the balance transfer card acts as a credit card you can use for emergencies. Keep an eye on balance transfer fees, which can be as much as 5%. Some cards only let you transfer a certain percent of the card’s balance, which can include fees.

How do different debt-relief methods affect credit scores? 

There are many ways to manage your debt. However, many methods affect your credit score, some more adversely than others. If your debt load is out of control, your credit score may be the least of your worries. Still, it's good to consider what your score may look like after you take care of your debts.

Using a home equity loan or a personal loan to consolidate your debts has the least impact on your credit. You use the money you borrow to pay off your old debts and then just make payments on the new loan. Personal and home equity loans tend to have a neutral or positive effect on your credit. However, if income problems caused your debt, you may continue to struggle with your new loan.

If you opt to pay down your debt by making minimum payments, you may see a minor negative impact on your credit. You’ll continue getting credit for making on-time payments, but your score also factors in the amount of credit you utilize. As such, static or growing balances could lower your score. In addition, only making minimum payments is more expensive in the long run, since interest accrues and further increases your balances.

Opting for a debt settlement program may be a better option. This type of program allows you to pay off your debt for a reduced amount. To go this route, you need to stop making payments, which can lower your credit score by as much as 100 points. Once the debt relief company you hire settles your debts, they’ll be marked as “settled” on you credit report, which may affect your likelihood of being approved for credit in the future. Settled debt remains on your credit report for seven years.

Bankruptcy is the most drastic option, and it can lower your credit score by as much as 200 points. If you file Chapter 7 bankruptcy, it remains on your credit report for 10 years. A Chapter 13 bankruptcy stays for seven years. No matter which chapter you file, you may notice the effects, especially when you apply for new credit.