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Compare debt relief services

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Debt relief can help you start fresh — if you avoid upfront fees and guarantees.

When done right, debt relief can help you rebuild your personal finances — but it isn’t available for all types of debt and can be expensive, especially if you need debt settlement. Make sure you’re working with a company you trust before signing up.

Our top pick: Freedom Debt Relief

  • Min. Loan Amount: $15,000
  • Requirements: Must have at least $7,500 in unsecured debt and live in a serviced state.

Our top pick: Freedom Debt Relief

Freedom Debt Relief is a debt settlement company that works to help people with unmanageable, unsecured debt get back on their feet.

  • Min. Loan Amount: $15,000
  • APR:
  • Requirements: Must have at least $7,500 in unsecured debt and live in a serviced state.
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Compare debt relief companies

Updated April 22nd, 2019
Name Product Costs Requirements
Monthly payment based on enrolled debt, no upfront fees
Must have at least $7,500 in unsecured debt and live in a serviced state.
Freedom Debt Relief is a debt settlement company that works to help people with unmanageable, unsecured debt get back on their feet.
18–25% of total enrolled debt
Must have a legitimate financial hardship which is preventing the ability to pay creditors and a minimum of $7,500 in debt.
Get back on your feet with a top-rated debt relief company that works with multiple types of debt.
Fees regulated by client's state of residence, can range from
$0 to $69 with an average monthly fee of $35. No upfront or contingency fees.
Debt must not be payday loans or secured loans.
This debt settlement alternative can help you find a path to financial freedom.
20% of enrolled debt or less, no upfront fees.
Must have verifiable income and more than $10,000 in unsecured debt or tax debt — excluding payday loans.
This company claims to significantly reduce your consumer and tax debt.
Charges and fees vary by the company you're ultimately connected with
Must be at least 18 years old and a legal US resident; additional terms may apply based on services and products used.
This A+ BBB-rated service offers free consultations to lower your monthly payments help you get out of debt faster.

Compare up to 4 providers

What services do debt relief companies offer?

Most debt relief companies offer a combination of services designed to set you on a debt-free path — and keep you there.

Debt management

With a debt management plan, a credit counseling agency negotiates with your creditors to lower your interest rates or monthly payments. You agree to begin paying off your debts through the agency with an affordable monthly payment — usually over three to five years — while the agency continues to pay your creditors on your behalf.

Intended for credit card debt, this is a decent option if you don’t qualify for a debt consolidation loan or balance transfer credit card.

Debt settlement or negotiation

Considered a more serious option, debt settlement or negotiation companies connect you with a specialist who negotiates with your creditors to reduce the amount you owe in exchange for a one-time payment. The agency pays off this negotiated amount, and then you repay the agency through monthly payments over three to five years.

Legitimate debt settlement companies charge a percentage of your enrolled debt as a fee, typically 20% of the amount. You’re often limited to enrolling unsecured debt only — so no mortgages or auto loans.

Debt consolidation

The term “debt consolidation” is used to refer to debt management, debt settlement or a debt consolidation loan, which is a single personal loan you take out to pay back all of your current debts. This leaves you with one monthly payment, ideally with a lower interest rate than the average of what you were paying on all of your previous debts.

If a debt relief company talks about debt consolidation, find out what exactly they’re referring to before signing any paperwork.

Credit counseling

Debt relief nonprofits offer credit counseling and services to help you straighten your finances by giving you advice on managing your spending, helpful workshops and counselors that can guide you toward creating a budget or getting your credit score. They also offer debt management programs.

Bankruptcy services

No legitimate debt relief company would attempt to steer you toward the bankruptcy process before exploring other options. But they can help you find a bankruptcy lawyer in your area if it’s a viable last resort.

When is it a good idea to use a debt relief company?

Unless you’re just looking to sign up for a few budgeting workshops, the services offered by debt relief companies can be risky. There’s no guarantee that your creditors will agree to lower rates or payments. And If you stop making payments to your creditors — as many debt settlement companies recommend — you could get sued during lengthy negotiations or end up in more debt than you started with.

But there are a few situations in which you might want to consider debt relief.

Consider debt relief if …

  • You’ve had a legitimate financial hardship. You might not qualify for some types of debt relief if you’re unable to prove you’ve undergone a hardship like unemployment, a medical emergency, a costly divorce, the death of a spouse or even extreme overspending.
  • You can’t handle your debt, but you’re not ready for bankruptcy. You’ve done the math and know you won’t be able to pay off your debt in the next five years — but you either don’t qualify for bankruptcy or are worried about losing your assets.

Consider other options if…

  • You’re struggling with federal student loans. You can’t use a debt relief company to negotiate your student loan rates set by the government. Fortunately, there are student loan forgiveness programs and other ways of dealing with hardship that aren’t as risky as debt relief.
  • You haven’t had any real setbacks. Just tired of all your debt? Consider taking advantage of credit counseling workshops and look into options like debt consolidation loans or balance transfer credit cards.
  • You’re considering taking on new debt. If you’re able to qualify for another loan, apply for a new credit card or think you can work your way out of your debt, you aren’t ready for — and might not qualify for — debt relief.

See how debt relief stacks up to a debt consolidation loan

Debt relief or bankruptcy?

You’ve probably heard that bankruptcy is a last resort. And it’s true: A bankruptcy stays on your credit report for up to 10 years. While the negative impact of a bankruptcy diminishes over time, your credit cards could be canceled, and you likely won’t qualify for tax refunds. You might even have trouble getting a job.

Debt settlement and other debt relief options might also damage your credit score and could expose you to a lawsuit if your creditors don’t want to wait through negotiation. And there’s no guarantee it will work, making it an even riskier move. If it does, however, it might not haunt you nearly as long as declaring bankruptcy will.

Take caution with either option and understand the lasting impacts on your credit to make an informed decision.

Debt settlement vs. bankruptcy: Which is better for you?

What should I be concerned about?

Debt settlement risks

Debt settlement is extremely risky and isn’t always a better option than filing for bankruptcy — it can sometimes do the same amount of damage to your credit score and isn’t guaranteed to work. Only around 10% of people who enroll in debt relief programs actually complete it. If you fail to complete the program, you might have to file for bankruptcy anyway.

On top of this, settled debt is usually considered taxable income. Once you factor in fees and interest that accumulated while you were in the program, you might not save as much as you thought you would. And if you stop paying off your creditors while you’re enrolled in a debt relief program, you could get sued.
How to settle debt yourself

Aren’t debt relief companies a scam?

Some are, but not all of them. The federal government has made an effort to crack down on scammers since 2010. It’s easier to find a legit credit counseling agency than any other type of debt relief company — they’re mostly nonprofit and the Department of Justice has already done most of the work for you by compiling a government-approved list.

It should set off alarm bells if you a see a company committing any of these offenses that are illegal for any debt relief company:

  1. It charges upfront fees for its services.
  2. It guarantees a specific amount of debt savings.
  3. It promises it can settle lawsuits and stop calls from collection agencies.
  4. It advertises itself as a new government program that can erase your debt.

Student loan debt relief scams

Student loans quickly add up, and often, it’s tempting to look for a quick fix to high monthly payments. While there are programs out there that can help alleviate some of the pain, you can’t trust everything you find — scammers are out there trying to prey on you when you’re down.

The most common scams that predators run claim to be able to lower or eliminate your debt. Often, you’ll be asked to pay a fee of hundreds or thousands of dollars to consolidate your debt or apply for a new program before your application is processed. Watch out for any offers to get you in on a new program, customer service reps that want you to give out your login information and anyone who claims to be a representative from the Department of Education. All of these are methods to talk you out of your money.

Getting sued for debt relief

Some debt settlement companies will tell you that once you’ve signed on for their services, it’s OK to stop paying your creditors if you can’t afford it. This is risky advice — not only will you continue to accrue interest and late fees on your creditors’ debt, but the debt may be sold to a collections agency.

If you don’t pay your creditors over too long a time, you could also end up being sued. And if you lose the lawsuit but can’t pay up, you can land in jail.

How likely is this scenario? Not very, but it is a possibility. Better debt settlement companies can connect you with legal services to avoid such problems, but not all do.

Remember that you’re not guaranteed to win a settlement. Avoid any debt relief company that says otherwise.

Is debt relief legal in my state?

Most states have some sort of regulation on the books requiring debt relief companies to get a license, file a bond with the state or both. They also often have rules restricting what types of services debt relief companies offer and capping fees. Because of this, some debt relief companies may not be available in your state.

The states a company operates in can change along with the laws — reach out to debt relief companies to make sure they’re currently operating in your state before signing up.

Debt relief regulations by state

Illegal:

  • Arkansas
  • Hawaii
  • Kansas
  • Louisiana (unless it’s nonprofit)
  • Massachusetts
  • New Mexico
  • North Carolina
  • Wyoming

Regulated:

  • Arizona
  • California
  • Colorado
  • Connecticut
  • Delaware
  • Florida
  • Georgia
  • Guam
  • Idaho
  • Illinois
  • Indiana
  • Iowa
  • Kentucky
  • Maine
  • Maryland
  • Michigan
  • Minnesota
  • Mississippi
  • Missouri
  • Montana
  • Nebraska
  • Nevada
  • New Hampshire
  • New Jersey
  • New York
  • North Dakota
  • Ohio
  • Oregon
  • Pennsylvania
  • Rhode Island
  • South Carolina
  • South Dakota
  • Tennessee
  • Texas
  • Utah
  • Vermont
  • Virginia
  • Washington
  • West Virginia
  • Wisconsin

No regulation:

  • Alabama
  • Alaska
  • Oklahoma
  • Puerto Rico
  • Virgin Islands
  • Washington DC

How to compare debt relief companies

Consider the following factors when comparing debt relief companies:

  • Eligibility. Many companies have minimum and maximum debt loans in total and per account. Others might have restrictions on what types of debt can qualify. Most also don’t operate in all states. Make sure you qualify first.
  • Costs. Debt relief companies often charge a fee that’s either a percentage of the total amount of debt you have or the amount they’re able to reduce your debt. Most credit counseling services should be free.
  • Transparency. Can you find all of the information you need online? Can customer service answer additional questions? If you can’t find vital information like how much it’ll cost beforehand, consider working with another comapany.
  • Accreditation. Most legit debt relief companies are accredited with either then American Fair Credit Council (AFCC), the International Association of Professional Debt Arbitrators (IAPDA) or the Better Business Bureau (BBB). The Justice Department also lists credit counseling services it approves on its website.
  • Customer reviews. Online review sites like the BBB and Trustpilot can be a great place to look out for red flags and learn what you can expect from a debt relief company. Your alarm bell should go off if you see several similar complaints from different customers.

Guide: Debt relief based on credit score and income

I signed up. Now what?

Debt relief companies can only do so much. You have to make their programs work for you.

5 ways you can make debt relief worth it

  1. Avoid taking on more debt. It might be difficult to avoid spending if you’re enrolled in a debt relief program, but many companies require you to close your accounts.
  2. Watch your credit score and report. Know what to expect and monitor your credit for any irregularities. In general, debt settlement programs can cause your credit to take a dive. Debt management shouldn’t affect your score, but you might see a line on your report indicating you’re paying off a debt through credit counseling. Other types of debt relief shouldn’t affect your credit score or report at all.
  3. Continue paying your creditors. If you have the means, continuing to make at least your minimum payments to keep interest and late fees from piling up and to keep harassing calls from collection agencies or potential lawsuits at bay.
  4. Make sure everything adds up correctly. Do your fees match up with your original agreement? If you see anything out of the ordinary, call your debt relief company. If the numbers don’t add up, you may need to re-evaulate your company and find a different solution.
  5. Take advantage of free resources. Credit counseling agencies and other debt relief companies often provide tools to help you stick to a budget or rebuild your credit score. Use them to more quickly get back on track.

2 things you might be (unpleasantly) surprised to know about debt settlement

While debt settlement can be helpful for a lot of people, know what you’ll have to pay before you get started.

  • Fees aren’t based only on your initial debt. If settling $10,000 in debt requires a fee of 25%, that doesn’t necessarily mean you’ll pay $2,500. Tricky to calculate, fees depend on how quickly your debts are settled, how your interest accumulates, whether you continue paying your minimums, late fees your creditor charges and more.
  • Debt settlement counts as income. That’s right: Any settled debt of more than $600 is considered taxable income. After taxes, you could end up saving only 10% — or less. There is a loophole, however: You might be exempt if your tax liabilities are greater than your assets at the time of the settlement. Talk with a tax specialist before enrolling in a debt settlement program to learn how this exemption might affect you.

Doing it yourself

Not ready for debt relief but can’t qualify for a debt consolidation loan? You have a few strategies to reduce your debt more quickly.

  • The avalanche method. Pay off your debts by tackling the ones with highest interest first. If you don’t know what your highest-interest debt is, it’s usually the one whose full balance is due soonest. You could end up saving a lot of money — especially on shorter-term loans that build up fast if you don’t pay them off.
  • The snowball method. Get quick wins by clearing your smallest debts first. The advantage is that smaller loans won’t get a chance to grow into bigger, unmanageable loans. But it could cost more than the avalanche method in the long run.
    Guide: How to use the debt snowball method

Negotiating your own debt relief

If you have the stomach for difficult conversations, you might want to take up negotiating your debt on your own. To do this, call up the people you owe money to, tell them that you cannot pay your balance in the time you have and then ask for better repayment terms or even a reduction on what you owe. It can be a difficult conversation, but stay strong and keep asking until you get them to agree to something you can afford.

If you’re unable to renegotiate your debt, you may have to declare bankruptcy. If you are going to do this, hire a lawyer to help you out in the process, and know that your credit and ability to borrow will be affected for many years.

Bottom line

Debt relief encompasses a wide scope of services, from debt negotiations with your creditors to debt management tools. When looking at your options, keep in mind that most companies with debt relief in their names deal mainly with debt settlement. Credit counseling agencies, on the other hand, tend to specifically advertise their counseling services.

Avoid signing up with a company that doesn’t meet federal requirements or otherwise rubs you the wrong way. And make sure you’ve exhausted other options like debt consolidation loans before taking any risky steps.

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