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Debt settlement companies, sometimes referred to as debt relief companies, provide the opportunity for you to reduce your total debt by negotiating with creditors on your behalf. If you’ve found yourself in a difficult financial situation due to high levels of debt, these services can be an effective way to reduce your liabilities.

The best debt settlement companies for debt relief in 2024 have experienced representatives who understand how to effectively negotiate lower payments or interest rates from creditors while protecting your rights as a consumer. They also offer additional services, such as budgeting advice and credit counseling to help you become more financially responsible.

Best debt settlement companies

Compare the best debt settlement companies

 TYPEAVAILABILITYFEES
National Debt Relief
For-profit
Not available in all states
Success-based; 15% to 25% of enrolled debt amount
New Era Debt Solutions
For-profit
Available in all states except
IA, ME and OR
Success-based; does not disclose
Freedom Debt Relief
For-profit
Not available in all states
15% to 25% of enrolled debt amount Setup fee: $9.95 Monthly account servicing fee: $9.95
Accredited Debt Relief
For-profit
Not available in all states
Success-based; 15% to 25% of enrolled debt amount
CuraDebt
For-profit
Available in all states except
HI, ID, IL, KS, LA, ME, NH, OR, SC, TN, UT, VT and WV
Success-based; does not disclose
Liberty Debt Relief
For-profit
Not available in all states
Success-based; 15% to 29% of enrolled debt amount
Century Support Services
For-profit
Available in all states except
HI, ND, OR, RI, VT, WV and WY
Success-based; 25% of enrolled debt amount, in most instances
JG Wentworth Debt Relief
For-profit
Only available in AL, AK, AZ, AR, CA, CO, FL, ID, IN, IA, KY, LA, MD, MA, MI, MS, MO, MT, NE, NV, NM, NY, NC, OK, PA, SD, TN, TX, UT, VA, WI and DC
Success-based; 18% to 25% of enrolled debt amount
Pacific Debt Relief
For-profit
Only available in AL, AK, AZ, AR, CA, CO, FL, ID, IL, IN, KY, LA, ME, MA, MD, MI, MN, MO, MS, MT, NC, NE, NV, NH, NM, NY, ND, OK, PA, SD, TX, UT, VT, VA, WI, WY and DC
Success-based; 15% to 25% of total debt enrolled

Methodology

Our expert writers and editors have reviewed and researched multiple debt relief companies to help you find the best debt settlement plan. Out of all the companies considered, the nine that made our list excelled in areas across the following categories (with weightings): services offered (25%), fees (20%), availability (5%), customer satisfaction (20%), digital experience (20%) and company history (10%).

Within each major category, we considered several characteristics, including number of services offered, settlement fees, money back guarantee and cancellation policy. We also evaluated each provider’s customer support options and customer reviews.

Why some companies didn’t make the cut

Of the debt relief companies that we reviewed, only a fraction of those who offer debt settlement made the cut. The settlement companies that didn’t have high enough scores to be included mostly received lower ratings for not publicly disclosing their fees, as well as not offering a money-back guarantee.

What is debt settlement?

Debt settlement is a process where a person negotiates with their creditors to pay back a portion of their debts in exchange for forgiveness of the remaining debt. Typically, this is accomplished with the help of a debt settlement company experienced in debt negotiation. 

Settlement can be a useful strategy if you’re struggling to keep up with your payments — but it’s important to understand the potential consequences. Debt settlement typically involves missing payments and allowing debts to go into default before negotiating a lump-sum payment with your creditors. 

Keep in mind: Debt settlement can harm your credit score and result in legal action from creditors. Before pursuing debt settlement, seek guidance from a qualified financial advisor or credit counselor.

How does debt settlement work?

Debt settlement, sometimes referred to as debt relief, involves negotiating with creditors to pay a portion of your outstanding debt in exchange for the creditor agreeing to forgive the remaining balance. This is usually accomplished with the help of a debt settlement company that handles negotiations for you and guides you through the process. During the negotiation phase, you’ll work together with your creditor to establish a new payment plan that you can realistically afford. 

Once an agreement has been reached, you’ll typically make payments over a specified period of time until the debt has been paid in full. While debt settlement can be an effective way to manage debt and avoid bankruptcy, it’s important to note that the process is complex and isn’t the right fit for everyone.

How to qualify for debt relief

Debt relief is an umbrella term often used to describe several types of debt relief products, including debt settlement and debt management plans. Qualification requirements for these programs vary by company and the type of debt relief offered. 

Most debt settlement companies require consumers to meet minimum debt requirements to qualify for debt relief programs — usually around $7,500 in total debt but may be as low as $5,000 or as high as $10,000. 

In addition to having enough debt to qualify for debt settlement, consumers should also demonstrate an ability to make the necessary monthly payments to the debt settlement company. Keep in mind, though, that these requirements vary by company.

How to find the best debt settlement company

Debt relief can help you get out of debt, but it’s important to work with an experienced and reputable company that can guide you through the process and help maximize your savings. Taking the time to do your research before selecting a company can help you achieve successful debt settlement results while protecting your financial and legal interests. 

Follow these tips to find the best debt settlement company:

  1. Do your research. Check the qualifications and licensing of any debt settlement company you’re considering. Ensure the company isn’t doing business with any collection agencies or creditors known to violate consumer protection laws and see if the company is a member of any reputable organizations, such as the American Fair Credit Council (AFCC) or The Association of Settlement Companies (TASC). Reading customer reviews to get an idea of previous customer experiences with the company is also a good idea. 
  2. Compare companies. Compare fees, terms and services offered by different companies to find one that fits your needs. Verify whether there are any hidden costs or fees associated with using a particular debt settlement service provider.
  3. Ask questions. Find out about the company’s negotiation strategies and experience working with creditors or collection agencies so you can assess how effective they’ll be at settling your debt successfully. Also, ensure the company is willing to work closely with you on a payment plan that meets your budget and timeline for debt repayment. 
  4. Inquire about other services. Find out if the company offers additional services, such as credit counseling or financial planning advice, to improve your overall financial situation after completing a successful debt settlement program.
  5. Don’t pay until both parties sign an agreement. Ensure that all paperwork related to your debt settlement is signed off by both parties before any money changes hands.

Debt settlement vs. debt management: What's the difference?

Debt settlement involves negotiating with creditors to reduce the total amount of debt owed, often in exchange for a lump sum payment. On the other hand, debt management involves working with a credit counseling agency to create a personalized plan to repay debt over time. The key difference between the two is that debt management doesn’t involve any reduction of the total amount owed, whereas debt settlement typically does.

Debt management is best for those who have a steady income and can make consistent monthly payments, whereas debt settlement may be better suited for those who are struggling to make their monthly payments and are facing delinquency or default. Ultimately, the best option will depend on your specific financial situation.

Is debt settlement a good idea?

Settling debt can be a good idea for some, but it’s not a one-size-fits-all solution. Debt settlement can help you when you’re in over your head and need some help to get back afloat. 

On the flip side, it can negatively impact your credit score and result in fees and taxes on the forgiven debt. Weigh the pros and cons and seek professional guidance before deciding on a course of action.

Pros

  • Reduced debt. When the debt settlement company negotiates with your creditors, they aim to reduce the total amount you owe. This can result in lower payments and an overall reduction of financial burden.
  • Faster resolution. Debt settlement often leads to a faster resolution than other strategies, such as debt management or bankruptcy filings.
  • Fewer collection efforts. Settling debt can help prevent pesky phone calls and letters from collection agencies trying to collect payment for outstanding debt.

Find out if a debt collector can get into your bank account and garnish your wages.

Cons

  • Credit score impact. Though you can fix your credit afterwards, settling debt can have a negative effect on your credit score initially. This is because creditors will usually report any missed payments and the settlement itself to credit bureaus. 
  • Fees. Debt settlement companies often charge fees for their services, which can add to the total amount of debt owed.
  • Tax implications. Depending on your individual circumstances, forgiven debt may be taxable income, which could result in an additional expense come tax time.
  • Potential for legal action. Creditors could file a debt collection lawsuit against you if you fail to make regular payments during the settlement process.

Alternatives to debt settlement

Debt settlement can be an effective way to manage debt if it’s done with the help of a qualified financial advisor and with full knowledge of the potential consequences. However, it’s not necessarily the right option for everyone. 

Make sure you consider these alternatives to debt settlement before committing:

  • Debt management plan: A debt management plan is a form of credit counseling that involves creating an organized repayment schedule with reduced interest rates negotiated with creditors. 
  • Debt consolidation loan: Debt consolidation involves combining — or consolidating — multiple debts into one loan. This can help reduce and streamline monthly payments. Plus, you may qualify for a lower interest rate if your credit score has improved since taking out the existing loans. The best debt consolidation loans offer accessible qualification requirements, flexible repayment terms and competitive interest rates. 
  • Bankruptcy: Filing for bankruptcy is an option, though you should only use it as a last resort because of the long-term consequences on your credit score and financial life.
  • Negotiate with creditors directly: Negotiating with creditors on your own may allow you to create your own payment plans or settle debts without incurring additional fees or damaging your credit score unnecessarily.
  • Part-time job or side hustle: Taking on extra work, such as freelance jobs, part-time jobs or side hustles, can provide the income needed to pay down debt quickly and stay on top of bills in a more manageable way than debt settlement typically allows.
  • Other debt payoff strategies: You can also attempt to pay off your debt yourself using a strategy like the debt snowball method.

If you’re considering a last resort, find out how long bankruptcy stays on your credit report.

Frequently asked questions (FAQs)

Debt settlement can have a negative impact on your credit score, as creditors could report missed payments and the settlement to credit bureaus. Additionally, debt settlement might also cause you to incur charges, like late payment fees, that can add to the total debt owed. However, if done with the help of a qualified professional and with full knowledge of the potential consequences, debt settlement won’t necessarily ruin your credit.

Debt settlement is best for people who have already fallen behind, or who are inevitably going to fall behind in the near future,” says Joshua Richner, of the International Association of Professional Debt Arbitrators (IAPDA) Certification. “[Although it will impact your credit,] if you are a good candidate for debt settlement, your credit score would have been affected anyway.”

Learn how to: Rebuild your credit after bankruptcy

Debt settlement can reduce the total amount of debt owed, but it can also hurt your credit score and result in fees that cut into your savings. Weigh the pros and cons of debt settlement companies and other alternatives before choosing a strategy. 

Review the pros and cons of each: Should you settle your debt or pay in full?

The best way to get out of debt depends on your financial situation. Some strategies for getting out of debt include implementing a budget, cutting back on discretionary spending, consolidating debt at a lower interest rate, negotiating directly with creditors and credit counseling services. 

Additionally, working extra hours through part-time jobs or side hustles may be beneficial in generating the income needed to pay off debt quickly. 

Seek advice from qualified professionals such as credit counselors before making any decisions about your financial future. Assess all of your options and create a personalized plan that works for you.

Which debt relief option is right for you? Debt settlement vs. debt consolidation

The cost of using a debt relief company depends on the type of services you’re seeking and the company you choose. However, most debt settlement companies charge a performance-based fee equal to 15% to 25% of the enrolled debt. There may also be an initial setup fee and/or monthly fees for administering the program.

Blueprint is an independent publisher and comparison service, not an investment advisor. The information provided is for educational purposes only and we encourage you to seek personalized advice from qualified professionals regarding specific financial decisions. Past performance is not indicative of future results.

Blueprint has an advertiser disclosure policy. The opinions, analyses, reviews or recommendations expressed in this article are those of the Blueprint editorial staff alone. Blueprint adheres to strict editorial integrity standards. The information is accurate as of the publish date, but always check the provider’s website for the most current information.

Kiah Treece

BLUEPRINT

Kiah Treece is a small business owner and former attorney with extensive experience in business and consumer finance. She focuses on demystifying debt so individuals and business owners can take control of their finances. Her work has been published on Forbes Advisor, Investopedia, The Spruce, Rolling Stone, Treehugger and more.

Jamie Young

BLUEPRINT

Jamie Young is Lead Editor of loans and mortgages at ӣƵ Blueprint. She has been writing and editing professionally for 12 years. Previously, she worked for Forbes Advisor, Credible, LendingTree, Student Loan Hero, and GOBankingRates. Her work has also appeared on some of the best-known media outlets including Yahoo, Fox Business, Time, CBS News, AOL, MSN, and more. Jamie is passionate about finance, technology, and the Oxford comma. In her free time, she likes to game, play with her two crazy cats (Detective Snoop and his girl Friday), and try to keep up with her ever-growing plant collection.