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The Best Debt Settlement Programs of 2017

We reviewed the Best Debt Settlement Programs of 2017 so that you can make the best decision when it comes to handling your debt.

Debt Settlement: Negotiation Process

You need to decide whether to take on the settlement process yourself, or consult an expert (settlement company or settlement lawyer). While experts cost money, they also have experience in greatly reducing your settlement amount. You should also be putting money away to offer your lender in exchange for a settlement.

If your account is still with a lender, contact them and ask for the best settlement possible. If it has been given to a collections agency, this process may be harder.

It can take years to get enough money to pay your lender. Often your settlement lawyer or company will ask you to start sending them money to put aside to make an offer for settlement.

Get ready to make an offer to your lender. Remember that they may not accept the amount you try and give them. All things considered, make sure that you have any accepted offer put in writing. You need to also ensure that credit agencies have been informed that an offer has been accepted.

Time to calculate the totals and see if you have come out on top. Make sure you factor in your settlement company or lawyer fee. Also, don’t forget to pay the IRS!

What Forms of Debt Can be Settled?

If you have overdue medical bills or credit cards, you probably have the highest chance of settling your debt. That’s because these types of debt have no collateral, if you decide to completely default, your lender will have no way of receiving compensation. Large amounts of credit card debt in this country end up being delinquent, and for that reason lenders are often very interested in reaching settlements.

On the other hand, federal student loans are extremely hard to settle. The government has made extremely strict regulations to prevent individuals from defaulting on this type of debt. There are only a handful of different ways you can come to an agreement, and it normally has much higher repayment thresholds than other forms of debt.

Does Everyone Qualify for Credit Card Debt Settlement?

There aren’t specific requirements for settlement applicants. This being said, lenders look more favorably on those who cannot afford to pay their debt. They want to ensure they’re getting the most they can out of the agreement.

What to do If Creditors Refuse to Settle?

The truth is many lenders may refuse to settle – there’s no legal reason they have to reach a settlement with you. Many will hire collectors or lawyers to recoup their losses.

Programs and Fees: Overview

 NationalAccreditedNew EraPacificFreedomDebtmericaCuraDebtPremierSuperiorOak View
 
Debt Settlement
Debt Consolidation        
Debt Management        
Time Frame in Months24-4824-4836-4824-4824-4824-4824-4812-421-426-48
Typical Reduction30%25%37%30%25%29%N/A33%42%35%
Typical Debt Relief Fee18-25%18-25%14-20%15-22%18-25%20-24%20%20%35%25%
Minimum Debt Amount$7500$7500None$10000$7500$10000$7500$5000$10000$1000

 NationalAccreditedNew EraPacificFreedom
 
Debt Settlement
Debt Consolidation   
Debt Management    
Time Frame in Months24-4824-4836-4824-4824-48
Typical Reduction30%25%37%30%25%
Typical Debt Relief Fee18-25%18-25%14-20%15-22%18-25%
Minimum Debt Amount$7500$7500None$10000$7500

 DebtmericaCuraDebtPremierSuperiorOak View
 
Debt Settlement
Debt Consolidation     
Debt Management    
Time Frame in Months24-4824-4812-421-426-48
Typical Reduction29%N/A33%42%35%
Average Fee for Debt Relief20-24%20%20%35%25%
Minimum Debt Amount$10000$7500$5000$10000$1000

 NationalAccredited
 
Debt Settlement
Debt Consolidation
Debt Management 
Time Frame in Months24-4824-48
Typical Reduction30%25%
Typical Fee for Debt Relief18-25%18-25%
Minimum Debt Amount$7500$7500

 New EraPacific
 
Debt Settlement
Debt Consolidation  
Debt Management  
Time Frame in Months36-4824-48
Typical Reduction37%30%
Typical Fee for Debt Relief14-20%15-22%
Minimum Debt AmountNone$10000

 FreedomDebtmerica
 
Debt Settlement
Debt Consolidation  
Debt Management  
Time Frame in Months24-4824-48
Typical Reduction25%29%
Typical Fee for Debt Relief18-25%20-24%
Minimum Debt Amount$7500$10000

 CuraDebtPremier
 
Debt Settlement
Debt Consolidation  
Debt Management 
Time Frame in Months24-4812-42
Typical ReductionN/A33%
Typical Fee for Debt Relief20%20%
Monthly Fees$10.75None
Minimum Debt Amount$7500$5000

 SuperiorOak View
 
Debt Settlement
Debt Consolidation  
Debt Management  
Time Frame in Months1-426-48
Typical Reduction42%35%
Typical Fee for Debt Relief35%25%
Minimum Debt Amount$10000$1000

Debt Settlement Companies

Settlement companies are one of the most popular ways to help settle your current debt. They have experience at dealing with lenders, and many may even have connections to your creditors.

Once you reach out to a settlement company, they will put you in contact with one of their credit counsellors. These individuals will assess your situation and attempt to find the best solution possible with your creditor.

Once initial details have been processed, your counselor will enact a settlement plan. You will be made aware of the details of this plan, and decide whether or not you’d like to proceed. Only agree to details that you can feasibly abide by.

The company will either then receive a fee, or a percentage of the settlement amount. This is the price of their services.

Choosing the Right Debt Settlement Company

There are plenty of sharks in the market. You want to make sure you choose the right debt settlement company. The FTC has released guidelines that you should use to ensure your settlement company is legitimate.

The following traits will be present in a reputable company:

R

Upfront and transparent regarding associated fees.

R

Have clear and accessible information about the settlement program

R

Provide you with clear estimate of length of time the process will take

R

Don’t guarantee exact amounts (this can never be predicted)

R

Encourage you to save a certain amount of money before offering settlement

R

Always seek your approval over major settlement decisions

Getting Prepared for Settlement

In order to be fully prepared for debt settlement you should immediately begin saving money for an offer. All good settlement companies will provide you with a figure they believe you should be saving towards – make sure you make this a financial priority in your life. You will most likely begin making a monthly payment into a designated account for an extended duration of time. This will be budgeted to your exact requirements. You’ll want to ensure this account is in your name and full insured by the FDIC.

Negotiations

As the money in your account begins to accrue, your settlement company will use the funds to negotiate with your creditors. While they are acting on your behalf, you will still have control over the way that the money is used. If you do not feel you want to accept an offer, you don’t have to. If negotiations end positively, your debts will begin to be alleviated.

Signing Your Settlement Agreement

If you and your lender come to an agreement, ensure the settlement is documented in writing. You need to ensure that there is a full record of a settlement being reached. You also need to make sure that this settlement is communicated to the respective crediting agencies responsible for your credit reports. Your settlement company should then transfer all of the necessary funds to your creditor.

Taxation

If you reach a settlement, you should then seek the advice of an accountant regarding your tax obligations. You will want to make sure that you fully compensate the IRS for the amount of settlement that was agreed. Not doing so could have further financial repercussions.

Accreditations and Customer Relations: Overview

 NationalAccreditedNew EraPacificFreedomDebtmericaCuraDebtPremierSuperiorOak View
 
Personal Advisor
Website Portal 
Mobile Application   
AFCC Accreditation   
USOBA Accreditation         
IAPDA Accreditation 

 NationalAccreditedNew EraPacificFreedom
 
Personal Advisor
Website Portal
Mobile Application 
AFCC Accreditation
USOBA Accreditation     
IAPDA Accreditation 

 DebtmericaCuraDebtPremierSuperiorOak View
 
Personal Advisor
Website Portal 
Mobile Application  
AFCC Accreditation   
USOBA Accreditation    
IAPDA Accreditation

 NationalAccredited
 
Personal Advisor
Website Portal
Mobile Application
AFCC Accreditation
USOBA Accreditation  
IAPDA Accreditation

 New EraPacific
 
Personal Advisor
Website Portal
Mobile Application
AFCC Accreditation
USOBA Accreditation  
IAPDA Accreditation 

 FreedomDebtmerica
 
Personal Advisor
Website Portal 
Mobile Application  
AFCC Accreditation
USOBA Accreditation  
IAPDA Accreditation

 CuraDebtPremier
 
Personal Advisor
Website Portal
Mobile Application 
AFCC Accreditation 
USOBA Accreditation  
IAPDA Accreditation

 SuperiorOak View
 
Personal Advisor
Website Portal
Mobile Application
AFCC Accreditation  
USOBA Accreditation 
IAPDA Accreditation

Debt Settlement: The Credit Impact

If you have reached the point that you are contacting settlement companies for assistance, chances are your credit is already significantly damaged. While this may be disheartening, don’t let it prevent you from eliminating your debt.

Discuss with your lender regarding whether they will be reporting the settlement to a credit agency. Settlements often appear for 7 years on your credit history. If possible, ask your lender if they’re willing to report the settlement ‘paid in full’, it can have a better impact on your credit report. Regardless, if you run a tight financial ship after all debts have been paid you will see your score begin to improve.

The Alternatives

Chances are your creditors may not settle. On top of this, there is a chance you will not be able to afford a settlement at all. Don’t worry, you have a few different options:

Consolidation

If you suffer from multiple high-interest debts, you should consider taking out a large low-interest debt and reducing the growth rate of your current financial burden. Often this debt is secured against an asset of yours, so you’ll want to make sure you meet your monthly payments.

Debt Management Plan

A credit counselor may be able to help you set up a debt management plan. This can allow you to pay off small monthly payments until your balance is paid in full. It helps reduce the interest burden of your current debt.

Bankruptcy

This should be seen as a last resort for anyone trying to escape debt. This will severely damage your credit score for the foreseeable future. In addition, it can mean the repossession of many assets including homes and vehicles. Bankruptcy is costly both financially and personally.

Will lenders allow me to settle debt for less than the amount I owe?

In short – yes, they will! The debt settlement industry isn’t a myth, you truly can have certain levels of debt forgiven if you come to an agreement with your lender. 

Debt settlement companies across the nation are able to provide their clients with varying levels of success when it comes to settlement. 

The real questions lie deeper in the concept. 1: How much can be forgiven? 2: Is there a catch? 3: How long is the process. 

The amount forgiven and length of process varies depending on the lender and particular situation. 

As for the catch – there can be associated fees and negative implications for your credit history. 

Don’t fall for the catchy advertisements that claim you’ll only pay back a small fraction of your debt. 

While many lenders will reduce your debt by considerable margins, others won’t. In addition, there are other fees to factor into the settlement you accept. 

For example, say you have an outstanding debt of $10,000 that you can’t afford to pay. It can take ages to come to an agreement, which means you will be accruing interest on the current debt you have. 

Hypothetically, if all goes well after negotiating with your lender, you come to agree to payback exactly half of the debt – or $5,000. 

So – what other charges are involved in paying the debt?

  • You will have to pay a fee to the settlement company for the forgiven debt, this is often in the range of 25% (in this case, this adds $1,250 to what you owe)
  • In addition, the IRS considers forgiven debt to be an income stream, you will have to pay additional tax on the amount (in this case, this amount could be up to $1,700)
  • The lender you have come to an agreement will then report your settlement to the respective credit agencies, this will then be present on your credit report for up to 7 years. 

The total debt could come to $7,950 and destroy your credit report.