Americans have more than $4 trillion in total consumer debt, not including mortgages, according to the Federal Reserve. If you have more debt than you can handle and no way to pay it in full, there are options.
Debt settlement offers a way to eliminate your debt by paying a fraction of what you owe. It’s not an ideal solution, but it’s available for consumers who have exhausted all other alternatives and want to avoid bankruptcy.
“Debt settlement is an option for consumers who can’t afford their current debt payments, and either can’t or won’t file for bankruptcy,” says Gerri Detweiler, credit expert and co-author of “Debt Collection Answers: How to Use Debt Collection Laws to Protect Your Rights.”
Debt settlement has significant risks and drawbacks. It should only be used as an option after you’ve thoroughly researched the process and considered whether the benefits outweigh the risks for your situation.
This guide offers information to help you decide whether debt settlement is a good choice for you. It allows you to explore alternatives and evaluate different debt settlement companies, and it has tips for avoiding problematic debt settlement practices.
The Best Debt Settlement Companies of 2020
U.S. News researched the leading debt settlement companies accredited by the International Association of Professional Debt Arbitrators or the American Fair Credit Council. Each company was evaluated based on key factors, including program time frame, types of debt settled, minimum debt requirements, fees and customer satisfaction.
There is no debt settlement company that is perfect for everyone, so recommendations are based on the top performers with strengths in key areas. These recommendations are meant to aid in your research by showing you the company most likely to meet your needs. While these recommendations offer a starting point, you should thoroughly research each company to determine whether it’s a good fit.
U.S. News evaluated 30 of the top debt settlement companies using 11 important measures, including service offerings, fees, accreditation, transparency and customer satisfaction. Recommendations are based on the companies that performed the best in those measures.
- Types of debt settled: Unsecured debt, including private student loans, and secured debt under certain circumstances
- Program length: Two to four years, but can vary
- Minimum debt settled: $7,500
- Minimum per account: $500
- Fee: 15% to 25%
- Accreditations: AFCC and IAPDA
- BBB rating: A+