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As someone who writes full-time about debt, I’ll be the first to tell you that trying to find a safe and legitimate debt settlement company isn’t always easy.
The debt relief space is full of bad actors who may try to take advantage of everyday people struggling to pay off their debt.
That’s why I spent the last three months speaking to representatives from each of the debt settlement companies below. I asked them about costs, average timeline and how much our readers can save with their company. I also verified any credentials from outside organizations.
But if you’re certain you want to pursue debt settlement, here’s who I recommend.
Compare the best debt settlement companies
Best for larger debts: Accredited Debt Relief
Accredited Debt Relief specializes in settling larger debts, with a minimum debt requirement of $10,000 to enroll. This is larger than most debt settlement companies, which have minimums of $7,500. If you have a particularly large debt load — think $20,000 or more — Accredited may be better equipped to handle your negotiations.
Accredited accepts most unsecured debts, including credit cards, medical bills, personal loans and some collection accounts.
Best for low settlement fees: Ascend Debt Relief
Ascend Debt Relief charges a settlement fee of 10% to 22% of the total enrolled debt. This is a significantly lower fee than most debt settlement companies, which typically charge 15% to 25% of the enrolled debt. A lower settlement fee can mean thousands in savings.
The fee is based on the average balance per enrolled account and your state of residence, Ascend says. Only enrolled debts of $30,000 or more will qualify for the 10% rate.
What to watch out for: Ascend is a relatively new company.
Established in 2024, this company is not yet accredited by the Better Business Bureau or the Association for Consumer Debt Relief. The cost of the fee is included in your monthly payment, ensuring that you have enough funds to pay both your creditor and the settlement company. It is illegal for a debt settlement company to collect a settlement fee before actually settling a debt. Additional costs may include fees for a dedicated savings account, typically consisting of a one-time enrollment fee and a recurring monthly maintenance fee, usually around $10.
Pros of working with a debt settlement company include their experience in negotiating with creditors on your behalf and providing a clear plan for paying off your debt. However, there are cons as well, such as expensive fees, a lengthy process that can take years, and no guarantee that settlement offers will be accepted by creditors.
To vet a debt settlement company, take advantage of free initial calls to ask about fees, timelines, and experience. Look at online reviews to identify any red flags such as upfront fees, guaranteed results, or pressure tactics.
Debt settlement comes with risks, including damage to your credit score, continued accrual of interest and fees, potential contact from creditors or debt collectors, and the possibility of forgiven debt being considered taxable income. It is important to thoroughly consider these risks before pursuing debt settlement as an option. One exception to settling with creditors is if you are insolvent, meaning your liabilities exceed your total assets at the time of settlement.
Instead of hiring a debt settlement company, you have several alternatives to consider.
You can try negotiating with creditors yourself, which may save you money on settlement fees. While success is not guaranteed, it’s worth a shot if you owe only a few creditors.
Another option is a debt management plan through a nonprofit credit counseling agency. This plan consolidates your debts into one monthly payment with reduced interest rates, ideal for those with credit card debt and a steady income to repay within three to five years.
Alternatively, a debt consolidation loan allows you to pay off multiple debts with one new loan, usually at a lower interest rate than your current debts. This can help you save money and get out of debt faster.
For those with overwhelming debt, bankruptcy may be an option. Chapter 7 bankruptcy erases most unsecured debts within four to six months, halts collection calls, and prevents lawsuits. However, it will negatively impact your credit, so consult a bankruptcy attorney before proceeding.
Each of these alternatives has its pros and cons, so carefully consider which option best suits your financial situation and goals.
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