The best debt settlement companies can negotiate a considerable lower debt with your creditors. Browse this directory of the best debt settlement companies nationally and per state.

Consumer debt has already surpassed an unimaginable ceiling in the USA as it stands at $17 trillion with credit card debt amounting to $1.7 of the total debt, a rude depiction of the burden most American households are facing.

As many households find themselves in this trap, there has been a rise in the search for debt settlement, one of the four solutions to debt relief.

Debt settlement companies vary, and debt settlement is not the easier option to getting out debt, and you must therefore be cautious when making that decision.

 On one hand, you may succeed from getting out of debt but you must acknowledge the consequences of the debt settlement option, which are credit card rating damage for a minimum of seven years and incurring costs from debt settlement companies.

 Besides, it may not work for everybody and lenders are not obliged to accept your debt settlement proposal.

It is that advisable to work with a credible and reputable debt settlement company and options on the market are many, but you must consider key five elements when choosing your option.

When selecting a debt settlement company, here are the five major factors to consider:

Company Accreditation

A credible dent settlement company must have been accredited by the American Fair Credit Council (AFCC) or the International Association of professional Debt Arbitrators (IAPDA).

Minimum debt requirement of the company

Most debt settlement companies have minimum debt requirement, for instance a minimum of $5K in debt for them to enroll you. But the minimum debt requirement varies per company. The higher your debt, the more company options you’ll get.

Types of debt settled by the company

Most debt settlement companies offer debt settlement solutions to specific types of debts including credit card debt, personal loan debt, unsecured consumer debt, IRS tax debt, and medical debt.

 Most companies don’t offer debt settlement solutions to secured debts and student loan debts.  Before enrolling, make sure to find out which type of debt your preferred debt settlement company can settle.  

Fees Charged by the company

Most debt settlement companies offer debt settlement services at a fee. The majority charge 15%-25% of the total enrolled debt. Charges per debt settlement company vary, some charge less and others more.

Make sure you’re fully acquainted with their full fee structure, and you’re capable of meeting all the fees.  Be cautious of companies that demand an upfront payment, and in such a case, walk away. Most companies enroll clients who have a stable source of income whoa the ability to pay the debt settlement company’s fee.

Location of the company

Each state has state-specific laws and policies on debt settlement practice, and they vary widely.  Certain dent settlement companies may not offer their services in your state because of state restrictions. Only a few large debt settlement companies operate nationally.

Overall, decide which Debt Settlement Company to go for based on longevity of service, accreditation, affordability and consumer satisfaction rating.

Best Debt Settlement Companies Nationally

The following national Debt Settlement Companies have been chosen based on longevity of service, accreditation, affordability and consumer satisfaction rating.

Company	Founded	Fees	Debt Settlement Minimum	Types of Debts Accepted	BBB Rating
National Debt Relief	2009	15% - 25%	$7,500	Credit Cards, Personal Loans, Lines of Credit, Medical Bills, Collections, Repossessions, Business Debts, and Certain Student Debts,	A+
Freedom Debt Relief	2002	15% - 25%	$7,500	Credit card debt, medical bills, department store cards, personal loans, and some private student loans. *Some business debts.*	A+
Accredited Debt Relief	2011	15% - 25%	$10,000	Unsecured debt, including credit cards, personal loans, collection accounts, medical debt and private student loans	A+
Pacific Debt Relief	2002	15% - 35%	$5,000	Credit card debt, Personal loans, Medical bills, Business debts, Collections, Repossessions, and Some student loans.	A+
CuraDebt	2000	Up to 20%	$10,000	Credit Cards, Medical, Personal loan & business debts, IRS debt, collections & repossessions, *certain secured debts*, and *certain private students loans*.	A+
New Era Debt Solutions	1999	14% - 23%	$7,500	Credit cards, personal loans, private student loans, and medical bills, personal lines of credit, signature loans debt, and department store cards debts.	A+
InCharge Debt Solutions	1997	$75 setup fee, $33 monthly fee	No minimum	Credit cards, personal loans, payday loans, and medical bills, personal lines of credit, signature loans debt, and department store cards debts.	A+
Credit Associates	2015	25%	$10,000	Unsecured debts, with a focus on credit card debt, medical bills, and business debt. They also help with personal loans, private student loans, and other unsecured debts like collections and store cards.	A+
DMB Financial	2003	15% - 25%	$10,000	Credit card debt, student and personal loan debts	A+
ClearOne Advantage	2008	Undisclosed	$10,000	Unsecured debt, including credit card debt, personal loans, medical bills, and some private student loans	C
Century Support Services	2012	20% to 27%	$10,000	Unsecured debts, such as credit card debt, unpaid medical bills, and unsecured personal loans	A+
Alleviate Financial Solutions	2018	15% - 25%	$10,000	Credit card debt, personal loans, medical bills, and store cards	A+

Best Debt Settlement Companies Nationally: how much you save and duration comparison

Best Debt Settlement Companies per State

What is Debt settlement?

Debt settlement is an agreement between a creditor and a consumer to allow reduced total debt balance or fees, as well as payments in lump sums. It is used between a lender and a borrower that makes a large, one-time payment on an existing balance in exchange for the relief of any remaining debt.

As the aim is to reduce the debtor’s obligations rather than the number of creditors, the biggest advantage of debt settlement is that consumers can eliminate debts without paying the full balance. If consumers are considering filing for Chapter 7 bankruptcy proceedings as a last resort when they are in serious financial trouble, debt settlement can be an attractive alternative to debtors.

However, creditors are not obligated to accept the offer to proceed with the negotiations. Also, to offer a settlement to creditors, a debtor must have enough cash to pay the agreed-upon amount. Debtors can work with debt relief agencies or credit counseling services as such institutions renegotiate the borrower’s current debt with the creditor.

There are two general types of debt settlement. The first is Do-It-Yourself (DIY) debt settlement, in which consumers themselves negotiate with creditors without the engagement of a third party.

Another type is professional debt settlement, in which consumers work with for-profit organizations that manage debt reduction strategies that seek to receive a ‘principal reduction’ that satisfies creditors even with fewer payments. Unfortunately, these measures are highly risky options that seldom work in the consumer’s favor. For one, it can take a toll on the debtor’s credit score and the success rate of debt settlement is very low. Also, the fees are not cheap either. In general, the fees consumers pay to for-profit organizations are between 15% and 25% of their debt.

A consumer who enrolls in a debt-settlement program is typically required to stop paying her debts,
thereby defaulting on these obligations and accruing late charges and penalty fees. Instead of directly
paying down debts, she makes regular deposits into a dedicated third-party account. Once this
account accrues enough funds, the debt-settlement company begins to negotiate agreements with
each creditor for the consumer to pay a percentage of the total amount owed.

These settlement agreements can be structured to be paid from the dedicated account in a single
lump-sum payment or, more frequently, as a “term settlement” with a series of payments made over
time from the dedicated account. Term settlements can range in length from just a few months to
over a year.

One risk for the consumer of a term settlement is that, if she is not able to make all
payments as agreed, the creditor will consider her to be in default on that debt and may revoke any concessions or principal reductions previously granted. While payments on any settlement agreements are made from the dedicated account, the consumer continues making deposits, which can be
used to pay for any additional settlement reached in the future.

Fees paid to debt-settlement companies can be high, even when the debt-settlement company is not
ultimately successful in settling most or all of the consumer’s debts. The debt-settlement company
earns its fee once the consumer agrees to the settlement agreement negotiated with the creditor and
makes at least one payment to the creditor from the dedicated account, regardless of whether it is
the sole settlement payment or the first in a series.

Typically, fees are based upon a percentage of the debt at the time the consumer enrolled; occasionally they are based on a percentage of the savings negotiated by the debt-settlement company.5 The Center for Responsible Lending (CRL) previously reported that typical fees range from 20-25% of enrolled debt. As discussed later in this chapter, several states that authorize debt settlement have limited the fees that may be charged.

In addition to the fees paid to the debt-settlement companies, consumers face other fees from this
arrangement, such as set-up, monthly, and/or other fees paid to the third party maintaining the
escrow account. Further, a consumer may have to pay
income taxes on any debt reduction, if she is not insolvent and the debt’s outstanding principal
balance is reduced by at least $600.

Consumers often enroll multiple debts from various creditors, leading debt-settlement companies to
attempt to negotiate separate agreements with each creditor over time. Although there is no guarantee that any debts enrolled will ultimately be settled, the American Fair Credit Council (AFCC), a
debt-settlement trade association, notes that consumers should expect to remain in a debt-settlement
program for three to four years before most or all of their debts can be settled.

Advantages and Disadvantages of Debt Settlement

Before filing for bankruptcy, consider the debt settlement option. The strategy has its benefits, but it also has several disadvantages.

Advantages

• You end up paying up to 50% less than what you owe.
• You can get out of debt completely.
• You stop phone calls from collection agencies.
• Creditors will eventually go away.
• You avoid filing for bankruptcy.

Disadvantages

• Some creditors won’t negotiate with debt settlement companies.
• You will owe fees of at least 15% (and often more) of the total debt you settle.
• A settled account will remain on your credit report for seven years from the date of your first missed payment.
• Your credit rating will drop 100-200 points.
• Missed payments accumulate late fees, penalties and other charges that prolong your settlement process.
• You could get sued by a creditor.
• Creditors may sell your settled debts to debt collectors, who could call you about repayment.
• You could get taxed on any debt forgiven.

Should I Consider Debt Settlement Option?

No ever wants to file for avoid bankruptcy —The best thing about debt settlement is that it can help you avoid bankruptcy.

Debt settelement option is best for you when need help from a debt settlement company to resolve your financial predicament. This is an option you should consider if you’re struggling with high-interest credit card balances you don’t see yourself paying off.

Overall, debt settlement may be a reasonable middle ground between paying for years vs declaring bankruptcy.

History of Debt Settlement in the USA

Credit counseling services in the USA began in the 1960s and have grown tremendously in leaps and bounds since then. Luckily, there have been upbeat efforts at the state and national levels to protect consumers through the enactment of laws and regulations that govern credit counseling services. Over time, banks and credit card companies have established Credit Counseling Agencies (CCAs) with the aim of limiting reckless filing for bankruptcy and avoid potential losses.

 CCAs from the beginning were mostly comprised of community-based and non-profit companies, and they help consumers who are in trouble paying their credit card bills through personal meetings and detailed analysis of individual incomes, budget requirements, and expenses.

These services are preceded by credit counselors by taking into account the debtor’s overall financial situation to design a personalized plan and provide services, as well as education for money management. Also, they assist consumers to better understand their financial situations, manage debts, and avoid bankruptcy. The recent trend, however, shows numerous CCAs transforming into for-profit organizations, such as companies that offer credit repair services or debt relief services.

Regarding the nationwide operation and management of these agencies, three main private institutions have been in place: NFCC, FCAA, and AICCCA.

The National Foundation for Credit Counseling (NFCC)

The National Foundation for Credit Counseling (NFCC) was established in 1954 and is America’s largest independent non-profit private credit counseling association recognized by the US courts. Since the creation of CCAs, NFCC was the central organization that oversaw most credit counseling agencies and serves as the coordinating body of member organizations in the 50 states of the US. To operate and fund non-profit CCAs, the NFCC established more than 350 local offices in each state called the Consumer Credit Counseling Service (CCCS).

This gave CCAs the freedom to offer education and credit services without charge. The core services provided by the NFCC are: debt management plan, credit report review, homeownership counseling, reverse mortgage advice, anti-seizure counseling, bankruptcy counseling, and small business owner financial coaching. Meanwhile, to become a member of the NFCC, the institution must be a non-profit organization and meet the NFCC Member Quality Standard outlined in the Council on Accreditation (COA), which is also a non-profit third-party private organization established in 1977.

The Financial Counseling Association of America (FCAA)

The Financial Counseling Association of America (FCAA), established in 1993, is the second largest non-profit association in the US whose primary function is to provide regulatory information and counseling to its members regarding consumer credit, housing, student loan, bankruptcy, debt management, and a variety of financial education services.

The main functions are to check members’ licensing status in each state, letting its members be informed of legislative changes, creditor policies, and related news. Notable differences in membership and counselor requirements are that FCAA allows non-profit and for-profit credit counseling agencies to become members and that the counselors can be certified by other approved certification programs.

The Association of Independent Consumer Credit Counseling Agencies (AICCCA)

The Association of Independent Consumer Credit Counseling Agencies (AICCCA) is an independent nonprofit credit counseling service agency established in 1993. Its roles are similar to that of the NFCC but have a narrower scope and put more emphasis on counseling for financial problems. Credit Counseling and Debt Management Services in the United States 4 Similar to COA, AICCCA also maintains membership standards to which its members must adhere, but are comparatively less restrictive.

 As per the American Bankruptcy Institute, to provide quality credit counseling services, it is recommended to check the list of member counseling agencies affiliated with NFCC and AICCCA, and then select an agency that meets some of the member counseling criteria in the list.

The criteria are that it must be an accredited non-profit organization, carry out authenticated services, hire certified counselors, provide practical counseling and training, offer one or more debt management options, require a reasonable fee or free consultation, and disclose information on services, fees, and revenues.

Although the above credit counseling agencies have lots of similarities in terms of their functions and service coverage such as service provision to all 50 states and US territories, agencies perform different functions to address different concerns across states and territories.

Regulations at the heart of consumer protection

Things however changed in 1994. When non-member CCAs sued NFCC in 1994 based on antitrust claims and settled the suit by agreeing to not grant its creditors the seats on the national board of directors, a major incentive for joining the NFCC disappeared and resulted in a huge decrease in NFCC member agencies.

The new entrants in the credit counseling market were mostly profit-driven, offered no one-on-one counseling, and deceived their customers. As a result, the lack of overseeing bodies and regulatory frameworks for new agencies led to unjust practices. To solve this problem, various state and federal measures were created and applied.

Federal regulations

Although many states have credit counseling laws, state-level regulation is often ineffective due to the circumstances and conditions of various states. It is also true that many states lack laws directly applicable to the credit counseling industry. In these states, general laws against false advertising and fraud are nearly the only regulations that can protect consumers using credit counseling services.

Thus, with the lobby of the National Conference of Commissioners on Uniform State Laws (NCCUSL) the Uniform Debt-Management Services Act (UDMSA) was enacted in July 2005. The law applies to both consumer credit counseling services and debt settlement services. This provides a comprehensive set of rules and regulations on debt counseling and settlement services, as well as related guidance and regulations. It is, among other things, a statute that provides rules for registration requirements, the maintenance of bonds, one-on-one counseling, and extensive reporting to consumers.

Furthermore, the two main agencies, The U.S. Internal Revenue Service (IRS) and The Federal Trade Commission (FTC) are aware of the major problems within the credit counseling industry and have been protecting consumers. These two key agencies each enforce the U.S. Internal Revenue Service tax laws and the Federal Trade Commission Act, which are attempts to reduce the harms caused by for-profit agencies charging abusive fees to consumers, or redundant counseling.

The IRS allows the federal government to establish rules for non-profit organizations and is in charge of collecting taxes, as well as administering the Internal Revenue Code, which is the core of the federal statutory tax law. In addition, the FTC is an independent US government agency that enforces civil antitrust laws and promotes consumer protection. Sharing jurisdiction with the Department of Justice Antitrust Division, the Commission strengthens regulations regarding aggressive marketing or information disclosures by for-profit agencies.

 One of the major roles of the FTC is resolving fraud reports of debt collectors’ illegal conducts. A debt collector is usually a person or company that regularly gathers debts collected by others. This could be a collection agency, a lawyer who collects debt as part of its business, or a company that buys overdue debt and then tries to collect it. The Fair Debt Collection Practice Act (FDCPA) enforced by the FTC strictly prohibits debt collectors from forcibly collecting debts from debtors using unfair or deceptive practices.

 Lastly, the Consumer Financial Protection Bureau (CFPB), which holds jurisdiction over banks, credit unions, securities firms, and debt collectors in the US, monitors how such organizations use social media and algorithms to target customers. The primary focus of CFPB is to provide accountability for enforcing federal consumer financial laws while protecting consumers in the financial marketplace. Currently, the hard efforts of CFPB’s law enforcement have allowed the number of for-profit agencies to largely decrease, from more than 1,000 to around 50.

State-level regulation

Most states hold statutes regulating credit counseling services ever since the US Supreme Court first upheld a state statute prohibiting credit counseling. As such, the common methods used by states were: forbidding credit counseling with the exception of non-profit agencies, forbidding fee collections, or combining both measures.

However, as each state possesses different qualification requirements, most states give licenses to both for-profit and non-profit organizations. But without supplementing federal or national statutes, state laws are not effective enough. In this case, states may use the requirements outlined in the UDMSA on agency applications, service regulations, or fraudulent acts.

On this basis, the State Administrators in each state decide the debt settlement business approvals, which have to be renewed annually. Also, such State Administrators are required to be the beneficiaries of Security Bonds of more than $50,000 for agencies’ capital requirements set by the UDMSA.

Debt relief services

Debt relief is the restructuring of debt to provide the debtor with full or partial deferred action. There are several ways to pay off debt, which include the reduction in outstanding principal (partial or full), putting lower interest rates on maturity loans, and the extension of the loan term.

In general, creditors are willing to consider debt relief measures only if the debtor or party’s defaults are so severe that debt relief is perceived as the best alternative. These measures can extend to debt-heavy parties, from individuals and small businesses to large corporations, municipalities, and even sovereign states.

Three types of debt relief measures are commonly used: Debt Management Plan, debt settlement, and debt consolidation.

Consumers overwhelmed by their credit card and other forms of unsecured consumer debt face tough
decisions when determining whether to continue paying on those debts as agreed. If they are unable
to do so, options such as negotiating directly with a creditor, entering into a debt-management plan,
or filing for bankruptcy can at least provide the consumer with the certainty that as long as they
complete the program, their creditors will not pursue collection activities or initiate lawsuits.

By comparison, debt settlement is a risky gamble in which consumers cut off communications with their
creditors and stop making payments, thus facing penalty interest rates and fees and resulting higher
balances. They hope that negotiations conducted on their behalf are successful in settling most or all
of their debts.