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You could potentially get rid of up to 29% of your unsecured debts.
Fallen into a cycle of debt and struggling to get your finances back on track? Debtmerica offers a debt settlement program with low minimums and a promising — if not small — track record. Its website isn’t the most transparent, though, and you’ll need to live in one of the 30 states it services to be eligible.
Debtmerica details
Free consultation. Complete basic information about your debt, and Debtmerica gets in touch with you.
Costs. 18%–25% of total enrolled debt.
Types of debt accepted. Nearly all unsecured debt.
Services offered. Debt settlement.
Minimum debt considered. $7,500.
Typical turnaround.
2–4 years
.
Accreditations. International Association of Professional Debt Arbitrators, American Fair Credit Council, Association of Settlement Companies.
Ratings. A+ BBB rating, 9.2 on Trustpilot.
Negotiations type. Direct negotiations.
Service limitations. Not licensed in Connecticut, Georgia, Hawaii, Illinois, Kansas, Kentucky, Minnesota, Montana, Nevada, New Hampshire, New Jersey, North Dakota, Oregon, Rhode Island, South Carolina, Tennessee, Vermont, Washington, West Virginia or Wyoming.
Free resources or tools. None.
Customer service. Phone.
Other details. Offers services in English, Spanish and Vietnamese.
How much does it cost?
In all states, Debtmerica settlement fees range from 18% to 25% of your enrolled debt. Your fee is included in your monthly payments to Debtmerica, though fees aren’t deposited in your escrow account. You’re entitled to have all payments returned to you at any time before your first debt is settled.
How does this work out? Say you currently carry $10,000 in credit card debt with an average APR of 18%. If you enroll in a three-year debt relief program and decide to stop paying your minimum payments, by the time you’re ready to settle, your debt will have increased to around $17,091.40. In this scenario, you would pay between $3,076.45 and $4,272.85 to Debtmerica in fees.
How much could I save with Debtmerica?
Typical Debtmerica clients reduce their debts by 50% — standard for a debt settlement company — and save around 29% after fees. So someone in the above scenario could end up saving something like $4,956.50 on $17,091.40 of debt.
What are the benefits and drawbacks of Debtmerica debt relief?
Benefits
Low minimum. Debtmerica’s minimum debt amount is half what’s required by competitors.
No upfront or hidden fees. Debtmerica doesn’t take any fees until at least one of your debts is settled.
Multiple language options. Debtmerica is accessible to English, Spanish and Vietnamese speakers.
Excellent customer service. Its support line was one of the easiest to navigate in our experience, with reps who were more than willing to answer our questions.
Drawbacks
Available in 30 states only. Nearly half of the country is unable to use Debtmerica’s services.
Uninformative website. It’s difficult to find basic information online, like minimum debt amounts or the types of fees to expect.
A little too eager to make promises. Debt settlement is risky business, so it raises some red flags when we hear what sound like promises on the fee percentages you’ll see — or anything really — without lots of qualification.
Compare more debt relief companies
Updated October 17th, 2019
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Before you sign up with a debt relief company
Debt relief companies typically charge a percentage of a customer’s debt or a monthly program fee for their services. And they aren’t always transparent about these costs or drawbacks that can negatively affect your credit score. You might pay other fees for third-party settlement services or setting up new accounts, which can leave you in a worse situation than when you signed up.
Consider alternatives before signing up with a debt relief company:
Payment extensions. Companies you owe may be willing to extend your payment due date or put you on a longer payment plan if you ask.
Nonprofit credit counseling. Look for free debt-management help from nonprofit organizations like the National Foundation for Credit Counseling.
Debt settlement. If you can manage to pay a portion of the bill, offer the collection agency a one-time payment as a settlement. Collection agencies are often willing to accept a lower payment on your debt to close the account.
What exactly is Debtmerica?
Debtmerica is a debt settlement company that negotiates with your creditors to reduce the debt you owe and pay it off all at once. It was founded in 2006 by two recent graduates of Wharton Business School who wanted a more effective solution for resolving debt than credit counseling or bankruptcy. It recently teamed up with World Financial Group (WFG) to offer debt management services to its clients as well. It’s also accredited by the main industry associations.
Debtmerica could be more comfortable for people who don’t like spending too much time online but love talking with people on the phone. What it lacks on its site is more than made up for through its customer service line.
What does the Internet say about Debtmerica?
Not much. Though Debtmerica isn’t accredited with the Better Business Bureau (BBB), it earns an A+ rating based on factors like transparency and time in business. However, it doesn’t have any customer reviews or complaints filed with the BBB as of December 2018.
It has much more of a presence on Trustpilot. It earns an average 9.2 out of 10 based on feedback from over 130 customers — 83% of which called it “Excellent.” Debtmerica responds to all Trustpilot reviews, demonstrating some effort to rectify customer complaints.
Reviewers praise its customer service for making such a complicated process easy to understand — though some wish consultants would check in more often.
Complaints are mild at best and mostly relate to problems you might run into with any debt settlement company. One was miffed that they weren’t told settled debt counts as taxable income — that’s one of the few things Debtmerica clarifies on its website now. Another customer was upset that Debtmerica can’t offer legal representation in the event that you’re sued — most debt settlement companies don’t. A third forgot to consider interest his debt would accrue while enrolled in the program, resulting in an unpleasant surprise.
The main takeaway: Know what you’re getting into before you sign up for debt settlement.
Is it safe to use Debtmerica?
Generally, yes. All sensitive information you enter on the site is encrypted, although Debtmerica doesn’t specify its safeguards. It also doesn’t sell or share your private information with third parties unless you authorize it to.
It’s a member of the International Association of Professional Debt Arbitrators and an accredited member of the American Fair Credit Council and the Association of Settlement Companies — three of the top trade associations that set and maintain industry standards. It’s not accredited with the BBB, however.
How do I get started?
You can sign up to have a Debtmerica consultant get in touch with you by filling out an online form. Follow these steps:
Go to the Debtmerica website and click Get Free Quote.
Select the amount of unsecured debt — debt that doesn’t require collateral — you want to settle.
Select the state you live in.
Enter your contact information and click Get Free Estimate.
After you submit the form, a senior debt consultant contacts you to discuss your situation and help you find the right program.
I’ve signed up. What happens next?
Enrolled in Debtmerica’s debt settlement program? You can expect to go through the following steps:
Make payments to Debtmerica. Part of these payments go toward your Debtmerica fees, while the rest is deposited in a trust account that Debtmerica eventually uses to pay for your debt settlement.
Debtmerica negotiates with your creditors. Once you have enough in your trust account, Debtmerica reaches out to your creditors to start negotiations. This part can take a few months — it’s not unusual for your creditors to deny a settlement company offer the first few times.
Debtmerica takes your fees. Debtmerica receives your fee once your first creditor settles a debt.
4 tips to make Debtmerica a smart choice
Debtmerica can set you on the path toward debt freedom if you’re wise about the choices you make after enrolling in its program. Follow these tips toward freedom from debt:
Know what you’re getting into. Former customers say that Debtmerica doesn’t always do a great job explaining how debt relief works. Ask questions if something is unclear — like how the fees work. That way, you won’t be surprised if things don’t work out the way you expected.
Don’t skip monthly deposits. Making as many monthly deposits into your settlement account is a priority: The longer it takes, the more interest that accumulates and the more you end up paying.
Make a budget and stick to it. Budgets can clean up your spending habits and help you avoid the temptation of taking on more debt while you’re in the program.
Contact customer service. If you have any problems or questions, reach Debtmerica by calling 800-470-8155.
Bottom line
Debtmerica isn’t as fancy as some competitors, but it offers competitive rates and has widely satisfied customers. But debt settlement is no joke. It can damage your credit, and you risk lawsuits or harassment by collection agencies if it doesn’t work out.
If you make consistent, on-time monthly payments, you can expect a settlement within four to six months — though nothing is guaranteed.
Yes, it’s possible for you to face legal action from your creditors if you stop making payments.
It’s not common, however, especially if your debt settlement program takes less than four years. You can also avoid legal trouble by continuing to make your minimum monthly payments to creditors while in the program.
Most do, but not all. If you have concerns about your creditor’s willingness to settle debt, ask a Debtmerica rep if they’ve ever worked with your creditor before. Google is your friend in these situations.
Yes, anything you save over $600 is considered taxable income. But you might not have to pay taxes if your liabilities are worth more than your assets. Consult an expert to find out if you qualify for an exemption.
Anna Serio is a staff writer untangling everything you need to know about personal loans, including student, car and business loans. She spent five years living in Beirut, where she was a news editor for The Daily Star and hung out with a lot of cats. She loves to eat, travel and save money.
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