For most people dealing with multiple debts with different monthly payments and deadlines is overwhelming and the whole situation can get out of hands very quickly. One missed payment can add up with late fees, penalties causing the overall debt to go up and become unmanageable. A debt settlement company helps you pay off your debts by negotiating with your creditors on your behalf. You will stop making payments to your creditors and start contributing to a special account managed by the debt settlement company. Some of these debt relief companies also offer a debt consolidation loan which is a new loan that you use to combine multiple debts into one and make a single monthly payment with a flat interest rate.
Debt settlement companies tend to target people with a lot of debt and can hardly make their monthly payments, which means many of the people that seek these services have poor credit. Debt settlement companies claim to ‘settle’ your debt, reduce the amount you owe by working out the terms with lenders. Most companies charge hefty fees, a percentage of the debt settled.
Choosing the best debt consolidation company can be difficult. Personal finance is inherently personal, so what works for one person might not work for someone else. Still, there are some rules of thumb you can follow.
The best debt consolidation companies will provide options that let you consolidate all of your existing debt. You don’t want to consolidate only some of your loans, leaving others outstanding, as that can quickly lead to confusion. You also want to look for low fees. The best debt consolidation companies will let you significantly reduce your debt while charging minimal fees.
National Debt Relief offers a wide variety of debt services, including debt consolidation loans and debt settlement services. If you want to take a multi-pronged approach, settling some debt and consolidating others, this company can help. Considers debt as minimum as $7,500 with fees varying from 18% to 25%. National Debt Relief claims to reduce the debt by 50% and settle in 24 - 48 months.
No upfront fees. Can help with consolidation and settling debt. Expert in the space, helped resolve over $1 billion in debt since 2009.
Can affect your credit. Not available in all states. Not all debt qualifies - does not cover debt from IRS, mortgages, auto loans or any other secured debt.
This company can help if you have a moderate amount of debt, and want help settling some and consolidating the rest.
Freedom Debt Relief assists with settling debts of up to $100,000, meaning you can sort out almost any amount of debt. $7,500 is the minimum debt required to qualify and fees range from 15% - 25%. Freedom Debt Relief negotiates with creditors, creates a plan and a savings account to which you would deposit monthly payments. Once a settlement happens then Freedom will charge a fee for its service, so no upfront fees.
Settle large amounts of debt - up to $100,000. Creates a personalized debt management plan.
Won’t consolidate debts less than $10,000. Does not cover secured loans.
Reduce large amounts of debt for a fraction of the amount owed in a fast and affordable manner.
Accredited Debt Relief offers a complete plan to resolve debt. Provides debt consolidation, debt settlement and debt management services. Offers services to people with debt as low as $7,500 with no upfront fees. Takes 2 - 4 years on an average to settle the debt with a money back guarantee. Accredited Debt Relief does not offer debt consolidation loans directly. Instead, the company matches you with lenders who offer debt consolidation loans.
Minimum requirement of $1,000 debt. See offers from multiple lenders at once. Assigns a personal account manager.
Might pay higher prices than going to lenders directly. Services available only in 32 states.
If you are looking for a one-stop shop to find the best debt management solution that fits your financial situation, Accredited is the company for you.
CreditAssociates offers a full suite of debt management services. You can consolidate as much as $100,000 in debt with CreditAssociates and take as long as six years to pay off. CreditAssociates claims to have helped tens of thousands of people turn their lives around in 24 - 36 months.
Get a low monthly payment with a long repayment term.
Longer repayment term results in higher interest costs.
If you really need to shrink your monthly payment, CreditAssociates can help.
Consolidated Credit Counseling Services offers debt consolidation loans as small as $1,000, making it easy to consolidate even a small amount of debt from multiple sources into one manageable loan.
Consolidate even a small amount of debt.
Does not offer debt settlement services.
If you only have a small amount of debt, this can be a great company to work with.
Cambridge Credit Counseling Corp is a non-profit organization that works to help people improve their financial wellness by getting out of debt. It offers a full suite of personalized debt management services, including consolidation loans.
Non-profit company that works for your benefit, not profit.
Can take some time to respond to requests for help.
If you’re worried about a for-profit company taking advantage of you, Cambridge Credit Counseling Corp is a good alternative.
GreenPath Financial Wellness offers a variety of financial counseling services, not just debt management services. The company can help you with nearly any financial question you find yourself asking. They consolidate your debt without a new loan, instead, asking you to pay them, and paying your creditors on your behalf.
Get help with all of your financial questions.
Cannot reduce the size of your payments or interest rates.
If you can handle your current monthly payments, but just want to make things simpler, GreenPath Financial Wellness’ consolidation services can help.
Pacific Debt Inc is a company focused on providing a variety of debt solutions. While the company does offer debt consolidation loans, it tends to focus more heavily on debt settlement services.
The company can provide information on settlement but offers consolidation loans as well.
May try to steer you towards settlement, even if you want to consolidate.
This company can help if you’re considering a combination of settlement and consolidation.
CountryWide Debt Relief helps people who have taken on a lot of debt and damaged their credit score. The company regularly works with people with poor credit, so nearly anyone can qualify.
Qualify even with poor credit.
High interest rates due to focus on poor credit consumers.
A good choice for people who struggle to qualify elsewhere.
United Debt Counselors does not offer debt consolidation loans. Instead, the company opens a new bank account that you must make a monthly deposit to. Then, the company makes loan payments on your behalf. In this way, you consolidate multiple payments into one. The company also focuses on helping you settle for less than you owe.
Settle for less than you owe and get one easy payment option for your debt.
Debt settlement can hurt your credit score.
If you have too much debt to pay in full, this service can simplify your payments and reduce your debts.
|Lender||Minimum Debt||Maximum Debt||How Long To Pay Off||Features|
|National Debt Relief||$7,500||$100,000||Up to 4 years||Also offers debt settlement service|
|Freedom Debt Relief||$7,500||$100,000||Up to 4 years||Can consolidate your debt without impacting your credit|
|Consolidated Credit Counseling Services||N/A||$75,000||Up to 4 years||Considers debt as small as $1,000|
|Accredited Debt Relief||$7,500||Varies||Up to 4 years||Matches you to other lenders who provide debt consolidation loans|
|Cambridge Credit Counseling Corp||N/A||$35,000||Up to 5 years||Non-profit organization working for your benefit rather than profit|
|CreditAssociates||N/A||$100,000||Up to 6 years||Customize your repayment period between 1 and 6 years|
|Greenpath Financial Wellness||$10,000||N/A||N/A||Does not offer loans. Instead, consolidates your loans into one payment by paying on your behalf.|
|Pacific Debt Inc||$10,000||$35,000||Up to 4 years||Focused on debt settlement rather than consolidation|
|CountryWide Debt Relief||$10,000||$100,000+||Up to 4 years||People with bad credit can still qualify|
|United Debt Counselors||N/A||N/A||N/A||Focuses on debt settlement, but allows you to consolidate by paying on your behalf|
To choose the best debt settlement or debt consolidation company, start by making sure the company you’re working with is reputable. Many debt consolidation lenders are predatory, and target people who are under financial stress. If you’re confident that the lenders you’re considering are legitimate, try to choose an option with the lowest total cost.
Once you’ve chosen a lender, you need to understand the debt consolidation process. You might be wondering, "How does debt consolidation work?"
First, you fill out the application and enroll in a debt management service from the company of your choice. The debt settlement company will reach out to you, evaluate your situation and creates a plan that suits your needs. The company will negotiate with each individual creditor and tries to bring down the total amount owed. A special savings account will then be created to which you will be contributing monthly payments that meet the payoff terms. If needed, the debt relief company might also assign a personal account manager to help you with the process.
The features that matter the most when comparing services are the maximum debt that you can settle, the time it takes, and the fees. You want low fees and rates, and a maximum debt large enough to cover all your existing debts. Debt consolidation fees an often be low enough to save you money when compared to credit card interest rates. In fact, this can be one of the best ways to consolidate credit card debt as you’re not doing something like putting your home at risk by using a HELOC, but you’re still saving money.
Debt settlement service are often expensive and must be considered as a last option. Credit score is often affected as you default on your payments and lowering the debt than what you originally owe is not always guaranteed. In light of all the debt settlement scams, it is highly advised to research every option before considering a debt consolidation service and get a second opinion before making the final decision.
Yes. In most cases a good debt settlement company can negotiate with the creditor and bring down what you owe.
There’s no one answer. Consolidation can improve your credit, but you still pay the full amount you owe. Settlement can save you money by reducing your debt, but your credit may suffer.
Yes, you can often negotiate with credit card companies to settle your debts for less than you owe. This may have a negative effect on your credit.
In the short term, debt consolidation loans might lower your score. In the long term, paying off your debt will improve your score, so the loan can help.
It’s smart to consolidate your debt if doing so can help you avoid missed payments or bankruptcy. It’s also smart if it saves you money.
Some companies structure their debt consolidation in a way that won’t affect your credit. Remember, in the long term, consolidating and paying your loans off will help your credit.
Yes, you can get a debt consolidation loan with poor credit. However, you might have trouble finding one with low fees and interest rates.
You can consolidate multiple loans. In fact, the point of debt consolidation loans is to turn multiple debts into one.
Debt settlement stays on your credit report for the same amount of time as other debts. Usually, this is ten years after you settle and pay the loan off.
The biggest risk of debt consolidation is that you’ll miss payments on your consolidated loan, or take on more debt because you feel like you have more money.
Nearly anyone can qualify for a debt settlement , but the debt management services in general are aimed towards people who have a bigger debt and can’t afford monthly payments anymore.
Consolidating your credit isn’t free. Many lenders charge a percentage of the amount you borrow as a fee when you take out a debt consolidation loan. You’ll also pay interest charges on the new loan.
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