Largest Debt Settlement Companies: Guide for 2024

You’re drowning in old debts. Collection agencies call constantly. You need a way out.

Most people don’t plan to fall into debt. It starts with a credit card for car repairs. Maybe student loans for tuition. Before you know it, minimum payments consume your entire budget.

Avoid Expensive Settlement Company Fees

Cambridge Credit Counseling helps you create affordable payment plans without the 10-25% fees that settlement companies charge. Get expert guidance and keep more of your money.

Lower Your Payments

You have other priorities. Your kids need college savings. Retirement accounts sit empty. When most of your income goes toward interest payments, you need a solution. Debt settlement might be your answer.

What Is Debt Settlement?

Debt settlement means paying less than you owe. Settlement agencies negotiate with creditors to reduce your total debt balance.

Here’s how it works. You pay a monthly amount to the settlement company. They deposit your payments into a dedicated bank account. Once enough money accumulates, they negotiate with your creditor.

Most companies can settle debts for 40% to 70% of the original amount. You could save thousands of dollars.

But settlement companies aren’t free. They charge 10% to 25% of your total debt. That fee cuts into your savings significantly.

The Biggest Debt Settlement Companies

Debt settlement is a massive industry in America. Credit card debt, car loans, medical bills pile up fast. People desperately seek relief.

The largest settlement companies include:

Freedom Debt Relief
National Debt Relief
Accredited Debt Relief
Clear One Advantage

Freedom Debt Relief

Freedom Debt Relief launched in 2002. The company has served over 650,000 clients. They’ve resolved more than $10 billion in consumer debt.

The company holds an A+ BBB rating. Most programs take two to four years to complete.

But customer complaints pile up. Most complaints focus on fees. Freedom charges 15% to 25% of your total debt.

The company claims no upfront fees. However, they can charge you the full service fee after making just one payment to a creditor.

Consider this example. Robert owes $10,000 in debt. Freedom negotiates a settlement for $6,000. Before fees, Robert thinks he’s saving $4,000. But Freedom charges 20% of his original debt, which equals $2,000. Robert pays the collector $6,000 plus Freedom $2,000. His actual savings? Only $2,000.

National Debt Relief

National Debt Relief opened in 2009. They’ve helped 400,000 people escape debt. The company maintains an A+ BBB rating.

Programs typically last two to four years. But the BBB shows numerous complaints.

Customers report unexpected fees. Many say the company charges more than originally agreed. Some clients claim National stops paying creditors to collect fees instead.

Accredited Debt Relief

Accredited Debt Relief started in 2011. The company has helped over 200,000 people. They’ve resolved $1 billion in outstanding debt.

Clients pay 15% to 25% for administrative services. On average, customers repay 55% or less to creditors. That percentage doesn’t include company fees.

You must owe more than $10,000 to qualify. The company accepts unsecured debts only. Credit cards and medical bills qualify.

Clear One Advantage

Clear One Advantage began in 2008. They’ve helped over 170,000 individuals settle debt. The company has an A+ BBB rating.

Customer reviews average 3.84 out of 5 stars. Programs start with a debt analysis. A specialist helps you determine affordable monthly payments.

Fees range from 15% to 25% of total debt. Most people complete programs within two to five years.

Are Debt Settlement Companies Worth the Cost?

Settlement companies can reduce your debt significantly. But you’ll pay hefty fees for their services.

Say you owe $10,000 in credit card debt. The settlement company negotiates 50% reduction. Sounds great, right? But you’ll pay $1,500 to $2,500 in fees. Your actual savings drops to 25% to 35%.

Most companies tell you to stop paying creditors. Missed payments make creditors more willing to negotiate. But this strategy devastates your credit score. You could lose several hundred points.

You can negotiate settlements yourself. No intermediary fees required. If you’ve stopped making payments, creditors may accept your settlement offer directly.

Handling settlement yourself requires discipline. Save money monthly toward payoffs. Design a plan targeting oldest debts first.

Eliminating older debts reduces lawsuit risk. Lawsuits complicate settlement efforts dramatically.

Settle Debt on Your Own Terms

You don’t need expensive companies to settle debt. You can negotiate directly with collectors and creditors.

If a debt collector is pursuing you, settlement becomes easier. Debt buyers purchase accounts for pennies on the dollar. They often accept 1% to 50% of what they’re demanding.

Debt collectors buy debts for about 8% of face value. If they settle for 10%, they still profit. Original creditors negotiate less willingly. You might settle for 20% to 70% with them.

Our partner Cambridge Credit Counseling can help you create a realistic payment plan based on your finances.

Create an offer you can actually afford. Can’t manage a lump sum? Monthly payments work too.

How to Negotiate Successfully

Make realistic offers. Expect counteroffers from collectors. Negotiation is standard practice.

For junk debt buyers, aim for 10% to 35% settlements. Original creditors typically accept 50% to 75%.

Propose payment plans you can maintain. Missing payments ruins settlement agreements.

Be honest about your financial situation. Creditors often have detailed information already.

Never threaten bankruptcy unless you mean it. Empty threats don’t work. Creditors hear them constantly.

Explain your financial hardship clearly. Provide proof of limited income. Social Security, multiple debts, or wage garnishments strengthen your position.

A Better Approach to Debt Settlement

Traditional settlement companies charge excessive fees. They profit from your financial distress. You deserve better options.

Technology-based solutions offer affordable alternatives. You maintain control over negotiations. No expensive middlemen taking your money.

Direct negotiation saves thousands compared to traditional companies. You keep more of your hard-earned money. Your debt gets resolved faster.

Settlement works best when you’re facing lawsuits. Collectors want to avoid court costs. They’ll negotiate seriously to close the case.

When settlement is reached, collectors provide written agreements. The case gets dismissed upon payment. You can finally move forward.

Your Path Forward

Debt settlement offers real relief from overwhelming obligations. But expensive companies eat into your savings.

You have the power to negotiate directly. Save thousands in unnecessary fees. Take control of your financial future.

Settlement isn’t right for everyone. Some situations require different debt relief strategies. Evaluate your options carefully.

Whatever path you choose, take action today. Ignoring debt makes problems worse. You deserve financial freedom.

Frequently Asked Questions

What is debt settlement and how does it work?

Debt settlement involves negotiating with creditors to pay less than the full amount owed. You either save money monthly until you have enough for a lump sum payment, or arrange a payment plan. Most debts settle for 40-70% of the original amount, though you may pay 10-25% in fees if using a settlement company.

How much do debt settlement companies charge?

Debt settlement companies typically charge 10% to 25% of your total enrolled debt. For example, on $10,000 in debt, you'd pay $1,000 to $2,500 in fees. Some companies charge fees after making just one payment to a creditor, even if your full debt isn't settled yet.

Can I negotiate debt settlement on my own without a company?

Yes, you can negotiate directly with creditors and collectors yourself. Debt buyers often accept 10-35% of what they're demanding, while original creditors may accept 50-75%. You'll avoid paying company fees of 10-25%, keeping more money in your pocket.

What happens to my credit score during debt settlement?

Debt settlement significantly damages your credit score. Most companies advise stopping payments to creditors, which can drop your score by several hundred points. Settled accounts show on your credit report for seven years and indicate you didn't pay the full amount owed.

How long does debt settlement take to complete?

Most debt settlement programs take 2 to 4 years to complete, though some extend to 5 years. The timeline depends on how much debt you have, how much you can save monthly, and how quickly creditors agree to settlements.

Largest Debt Settlement Companies: What You Need to Know