DEBT SETTLEMENT

When debt becomes too much to handle, you may be confused by the sea of options available to you, including debt settlement. Debt settlement is when a company negotiates with your creditors on your behalf to reduce the amount you’ll pay. The rest of the debt is typically forgiven.

It sounds like a sweet deal, but debt settlement is a very serious step you shouldn’t take without a full understanding of the process. If you need help understanding what debt settlement is and whether it’s right for you, I provide a detailed guide later in this post. If you already know that debt settlement is for you, take a look at the best debt settlement companies of 2016 that came out on top during my research:

• National Debt Relief
• CuraDebt
• New Era Debt Solutions

If you’re drowning in debt, you’re hardly alone. The average American household has more than $7,000 in credit-card debt in 2015 — and when you filter out those who don’t carry any credit card debt at all, the number zooms up to more than $15,600.

Read on to discover why I chose these companies as the best debt settlement companies. I’ll also discuss whether debt settlement is the right choice for you, what you need to know about the process and its risks, alternatives to debt settlement, and how to avoid scams.

 Best Debt Settlement Companies

National Debt Relief

A lot of debt settlement companies’ websites are short on specifics. It’s not hard to figure out why: They want you to call so they can hook you with a hard sell. But National Debt Relief does a pretty good job telling you what you can expect from debt settlement. The site details what kinds of debt qualify, how much you need to enroll, the fee you can expect to pay (20%), and the average savings after fees (30%). The company works with a wider range of debt than most. National Debt Relief also has an A+ rating with the BBB, and is accredited with the AFCC and IAPDA.

National Debt Relief is available in an impressive 41 states. One turnoff: A long list of state-specific links made it more difficult than necessary to determine exactly where the company provides settlement services. (You’re out of luck in Connecticut, Georgia, Kansas, Maine, New Hampshire, South Carolina, Oregon, Vermont, and West Virginia.)

Who It’s Best For: If you have some more niche types of debt — for instance, unsecured business debt — National Debt Relief may still be able to help. It even considers cases involving student loans on a case-by-case basis. The enrollment minimum is also relatively low at $7,500.

Who Should Pass: If you’re wary of newer companies, note that National Debt Relief is less established than some of its competitors, having been established in 2009. Its average debt reduction is also a bit lower than some competitors’.
 

 CuraDebt

CuraDebt is another debt-settlement service with an impressive savings average: 40% after fees. It also will consider working with business debt on top of other major unsecured debt. It offers a customer-service bonus with online chat, a nice perk for potential clients who may not want to call right away. It is accredited with the AFCC and IAPDA, but not the BBB. CuraDebt has recently improved its website to be more transparent, but it could still be better organized.

CuraDebt’s services are available in 37 states. You’re out of luck in Colorado, Connecticut, Georgia, Idaho, Illinois, Kansas, North Dakota, New Hampshire, South Carolina, Vermont, Washington, Wisconsin, and West Virginia.

Who It’s Best For: CuraDebt says it will work with as little as $5,000 in debt in certain circumstances, so if you have a smaller amount of debt, it might be worth a look. Incorporated in 2000, CuraDebt is also one of the more established debt-consolidation companies.

Who Should Pass: If you put a lot of stock in Better Business Bureau accreditation, note that CuraDebt doesn’t have it (though it does have an “A+” rating). And CuraDebt won’t be an option if you live in the 13 states where it doesn’t do business.
 

 New Era Debt Solutions

Transparency is lacking in the debt-settlement industry, but New Era Debt Solutions bucks this trend with a more transparent website than most companies I evaluated. It is by far the most thorough in terms of explaining what prospective clients need in order to qualify.

The “truth and transparency” section not only lists important basics such as the length of the program, fees, and average debt reduction, but also other facts such as how many clients drop out of the program. It even details how many clients are sued by creditors during the settlement process and is honest about the fact that clients will continue to receive calls from collectors.

New Era has a shorter time frame than many companies, at an average of 27 months. Its fees are lower than those of many competitors at 15%, and it has a higher average debt reduction at just under 44%.

Who It’s Best For: If you put a lot of stock in longevity, New Era was incorporated in 1999. It’s also accredited by the BBB and IAPDA, and its website offers a more thorough look at the debt reduction process than is typical. Unlike most companies that require $7,500, $10,000 or more, New Era also doesn’t have a minimum debt requirement.

Who Should Pass: New Era is only available in 17 states (Alabama, Alaska, Arizona, Arkansas, California, Florida, Indiana, Massachusetts, Michigan, Nebraska, New Mexico, New York, North Carolina, Oklahoma, Pennsylvania, Texas, and Virginia) so you’re out of luck outside those states. It also does not work with anything other than basic debt.
 

 Other Companies to Consider

Donaldson Williams is one of the few companies that didn’t charge upfront fees for debt settlement before 2010 when federal regulations began prohibiting the practice. The company also doesn’t force you to open a separate account to manage your settlement money, which could be reassuring to potential clients. Its 17% fee, charged on what you save, is among the lowest I saw. However, it can be a bit harder to get in touch with a representative at this small company. Donaldson Williams also requires more debt ($15,000) to consider working with you.

Debt Relief a la Carte, run by a former collection agent, offers a unique service in the debt-settlement industry: A short-term debt settlement program that averages only 72 days to complete. The results are also impressive: 43% after fees, which are charged only on the amount saved, not the amount enrolled. The website is thorough, with answers to almost any question you may have. The catch? You need the financial resources to settle your debt very quickly when you join — for most people, this isn’t the case. The company is also small and must be choosy about new clients.

ZipDebt could be a viable option if you want to try settling your debt yourself but don’t know where to start. For a flat fee ranging from $197 to $777, you receive a range of materials aimed at helping you bypass settlement companies while avoiding bankruptcy. ZipDebt backs its materials with a 365-day money-back guarantee. The downside here is obvious, however: The idea of attempting debt settlement yourself might be too daunting and time-consuming to seriously contemplate.