Freedom Debt Relief, a subsidiary of Freedom Financial Network, has resolved over $8 billion in debt since their founding in 2002. The company has considerable industry experience and high customer satisfaction ratings. With all the major industry accreditations, Freedom Debt Relief is a great option for many consumers. They offer multiple debt settlement (involves working with creditors to lower total debt owed) and debt consolidation (involves consolidating all customer debt into single monthly payments) services and are available in 33 states. However, they may have potentially higher prices than other companies in the industry.
Pacific Debt Inc. has been in the debt settlement industry since 2002 and is headquartered in San Diego. The company holds major industry accreditations with the American Fair Credit Counsel (AFCC) and the International Association of Professional Debt Arbitrators (IAPDA). In addition to debt management experience and accreditations, Pacific Debt has achieved a top spot on our list of debt settlement companies because they offer their debt relief services at one of the lowest prices in the industry. Pacific Debt's pricing ranges from 15 to 25 percent of the total debt you enroll. The major downside to Pacific Debt is that their debt management services may not be available in your state.
Consolidated Credit has helped clients hammer away millions of dollars worth of debt since 1993. Since opening, it has helped over 5 million customers with debt issues and is one of the largest credit counseling agencies in the United States. The company boasts highly competitive interest rates, industry accreditations, and a positive reputation with online customer reviews. Consolidated Credit also offers educational resources to improve its customers' financial literacy, particularly regarding credit cards and debt. Some of these resources include webinars, debt-to-income ratio and credit score cost calculators, and articles on various financial topics. Consolidated Credit also offers a community outreach program to provide financial education.
Consolidated Credit is one of the biggest companies in debt consolidation--the company has been featured in CNN, Forbes, MSNBC, and more. By making one (lower) monthly payment with the company, you can reduce your credit card debt by 30-50%.
SettleBankDebt.com has over 20 years of industry experience. The company has offices in Florida and New York. Its debt settlement services operate under the name SettleBankDebt.com and used to be called DS Financial Services. The company offers a basic website with limited information on its services, pricing, and company. It works solely with clients who have the ability to settle, often with accounts that are over six months past due. SettleBankDebt.com focuses on fast settlements for eligible clients and is upfront about whether or not debt settlement is right for individual consumers.
Accredited Debt Relief is a debt settlement company that also offers debt consolidation services; it works with a highly experienced team to negotiate with creditors and help customers settle debt from credit cards, medical expenses, and unsecured debt payments. According to the company's website, clients that make all of their monthly payments pay around 50 percent of their total enrolled debt before fees. After fees, they pay 68 to 75 percent over 24 to 48 months. The company has been in business since 2008.
Just like the company's name implies, Accredited Debt Relief is highly accredited. The company is accredited with the AFCC, IAPDA, and San Diego Regional Chamber of Commerce. These are the top national accreditations available to debt settlement programs.
CuraDebt was founded in 1996 in Irvine, California as a debt settlement company. The company offers affordable pricing, low minimum debt qualifications, and plenty of industry experience. However, there are a number of troubling questions surrounding their business practices and ownership that should be carefully considered before enrolling with them.
DebtWave Credit Counseling, Inc. was founded as a nonprofit organization in 2001. It seeks to help consumers become debt free in three to five years through financial education, credit counseling, and debt consolidation services. The company provides a variety of online resources, such as calculators and a personal finance blog. Along with its focus on financial education for consumers, DebtWave is active in the San Diego community. Its program called San Diego Financial Literacy Center focuses on helping youth, military, and low to moderate income families.
National Debt Relief specializes in debt settlement services and boasts a number of accreditations. They work with both unsecured and secured forms of debt. National Debt Relief negotiates with customer's creditors to reduce your total debt. Creditors that accept such terms with National Debt Relief end up forgiving the rest of customer debts. The company has quite the record of settling debts between 30 to 50 percent less than what their clients owe. Many debt management customers frequently complain about always speaking to a different person every time they call in, causing some friction in the customer experience. Additionally, fees are relatively low but have the potential to be higher than the industry average.
Since 1998, Superior Debt Relief has helped customers settle debts as an alternative to bankruptcy. Although the company requires clients to have at least $10k in debt, it aims to get those debts settled in 12 to 36 months. However, Superior Debt Relief is only available in 23 states.
Debt relief options range from debt settlement, debt consolidation, and debt management to credit counseling, bankruptcy, and do-it-yourself programs. These debt relief options are designed to deal with a wide variety of debt problems, namely credit card debt, student loan debt, debt from medical bills, and other types of unsecured debt. Because every person has a unique debt situation, your choice might be completely different from your friend or family member's choice of debt relief company. You need to first understand the different options and then look into companies to pinpoint the perfect partnership for you. To get the best help for your burdensome debts, you should also consider the type of debt you owe, the amount, your credit score, and your financial ability to make monthly payments. All of these factors are considered by debt professionals when designing plans for you to progress on the road to financial freedom. Weigh the various debt relief options against your personal financial situation to be able to choose the best debt relief company. Remember, the best debt relief companies will have experience in dealing with creditors, the ability to help you with any type of unsecured debt (credit card debt, student loan debt, etc.), and will have fewer fees than other debt negotiation companies.
Debt consolidation is a general term used to describe combining multiple payments from different creditors into one monthly payment. It is important to note that debt settlement companies sometimes claim they are debt consolidation companies. Though they allow you to make one monthly payment rather than pay multiple creditors, the key difference is that they seek to settle your debts for less than you owe. Typical debt consolidation companies help you pay your debts in full with a lower monthly payment.
There are many ways to consolidate your debt; however, debt consolidation companies tend to offer one of two services. The first is a debt management plan (DMP). This service is offered by credit counseling agencies. The second method is a personal loan. Some companies offer "debt consolidation loans," however this is often just another term for a personal loan. While debt consolidation is highly beneficial, it does rely on your personal responsibility. Debt consolidation is designed to help you change spending habits, and because of this, many customers do not fully complete the process.
There aren't many downsides to debt consolidation, which is why it remains one of the most sought after methods of debt relief for customers. Take a look at the pros and cons of debt consolidation with a debt management plan:
Using a loan to consolidate debt offers may similar pros; however, the savings are dependent on the terms of the loan. Your creditworthiness is a large factor in interest rates and may not provide you with substantial savings.
Debt settlement is the process of negotiating with your creditors for a lower overall debt amount. Usually, consumers work with a debt settlement company to plan the best approach. Those who find themselves deep in debt with few or no other debt relief options will find debt settlement a life-saving option.
The process typically begins with a free consultation with the company to discuss your financial situation, debt amount, and creditors. The company then makes a payment plan based on your situation. Over several months, you deposit a set amount into a specific savings account. Rather than paying your creditors, you place money into this account to build up a lump sum. Once you have enough money saved, the debt settlement company will negotiate with your creditor, trying to convince them to settle your debt for the accrued amount. If debt settlement is successful, it can lower your total debt amount, saving you thousands of dollars. Rather than paying your full balance, you may end up paying only 50 percent. Also, once a settlement is reached, you are completely finished with that particular creditor.
Customers should know that debt settlement can hurt your credit score. Since you place money into a savings account rather than pay your creditors, your debts will become delinquent. Your score will drop during the process. Additionally, your debt will be marked “Settled” rather than “Paid in full” on your credit report.
Not all creditors are willing to negotiate, and they have no legal obligation to settle. If they are willing to settle, the terms are up to their discretion, therefore you may only save a small amount. Also, if you work with a debt settlement company, it often charges a percentage of your enrolled debt, which may also limit your savings. Though it is unlikely, you could be sued by your creditors. The settlement process can take two to four years to settle all of your debts. Finally, if you save over $600, you may be taxed on your forgiven debt. The only way to avoid this is if you are insolvent, i.e. your liabilities exceed your assets.
Every debt relief company should offer a free consultation before you are required to sign anything. During this consultation, there are a number of things you need to find out to determine whether to choose the company in question. Refer to these suggestions when preparing for your free consultation:
Ask about the client-representative relationship. It is better to work with the same person throughout the debt relief process to allow for a more personal relationship and avoid mistakes in your debt case. In some cases, companies randomly assign customers to different debt professionals for each consultation.
Ask about projected prices for your case. Debt settlement companies will charge you a percentage of your enrolled debt (usually between 15 and 25 percent). If you owe $20,000 total in debt and your debt relief company saves you $10,000 but also charges 25 percent of your enrolled debt, you will end paying $10,000 to your creditors and $2,500 to the debt relief company. On the other hand, debt consolidation companies charge a monthly management fee for their debt management plan services. This fee varies by company and state.
Ask about all possible debt relief options. Though your debt relief professional might suggest one course of action, you need to be aware of all your options. Make sure your representative is open with you about your options.
How will debt relief affect my credit score and report?
It depends on if you choose debt settlement or debt consolidation. Debt settlement can lower your score but it does bounce back much faster than it would if you declared bankruptcy. If you opt for debt settlement, your debts will be marked as "settled" instead of "paid in full" on the credit report. If you decide to go with debt consolidation, there is usually an increase on your credit score as you pay off your debts. If you complete the entire program, your debts are paid in full.
How long will it take to pay off all my debt?
With debt settlement, you can usually pay off all of your debts within 24 to 48 months. With debt consolidation, it could be anywhere between 3 to 5 years.
What are the tax consequences of debt relief?
If you settled your debts for less than you owe, you may have to pay taxes on saved money over $600. However, if you are insolvent (have more debts than assets), you don't have to pay this. If you still are not convinced of debt relief due to possible tax penalties, try asking about it during your free consultation or research debt relief taxes further.
How do I know if a company is legitimate?
If a company is FTC compliant and accredited by professional organizations such as the AFCC, IAPDA, NFCC, etc., chances are it is a legitimate company. With these accreditations, companies are held to higher standards and company employees receive another level of training in debt relief strategies, often leading to higher customer satisfaction. If you do not trust these accreditation organizations alone, you can look at each company's social media comments (which usually house complaints/praises for most companies). To take your research a step further, review the top debt relief companies and their respective debt relief reviews.
Do I need to take out a loan to pay off my debts?
No. It is one of the more popular options, but you need a good credit score to qualify for a low-interest rate. If you really want to stick with a debt consolidation strategy that doesn't require you to have a high credit score to take out a loan, you can go with a credit counseling agency that provides debt management plans (DMPs) as opposed to a loan. Debt settlement is another option that does not require you to get a loan.
How do I know if debt settlement or consolidation is right for me?
This will depend greatly on your current financial situation. You will have to answer a few questions before finding the right option. For example, how much debt do you currently have? Are you close to paying it off? Is your debt delinquent? If you are falling behind on your payment and are unable to pay the full balance of your debt, debt settlement may be a good option for you, especially as an alternative to bankruptcy. On the other hand, if your accounts are still current, you want to protect your credit and your assets, and you want more manageable monthly payments, then debt consolidation is a great option. Take advantage of the free consultation offered by each company to discover which option is best. If you want to get a closer look at your options with debt consolidation, you can take this personal debt quiz.
Are all debt relief companies the same?
Not exactly. Most debt relief companies claim to provide all debt relief services but most have specialties. For example, a credit counseling agency can provide you with debt management plans while companies that focus on debt settlement probably don't offer DMPs. Additionally, some debt relief companies are non-profit while others are for-profit.
Can I pay off my debts on my own?
Yes, there are many do-it-yourself methods, but most people need help to navigate the complexities of debt relief strategy. Additionally, you may find savings on your own, but you are much more likely to cut a greater number of debts with the help of a debt relief expert.
Is debt relief better than bankruptcy?
Debt relief is usually a better option than bankruptcy. More specifically, debt consolidation is much better than bankruptcy, but the real question is whether to use debt settlement as opposed to bankruptcy. Bankruptcy can decrease your credit score 160 to 220 points and can stay on your credit report for 10 years.
What types of debt can I enroll in these programs?
Most companies only offer programs that accept unsecured debt (credit card debt, some student loan debt, unsecured personal loans, etc.). However, there are a very limited number of companies that do provide debt relief services for secured debt. You will have to talk to each company for details on which types of debt can be enrolled.