If you're struggling to pay off debt, you may be able to lower your monthly payments by enlisting the help of a debt relief company.
Unlike debt consolidation, which merges multiple balances into one loan (ideally with a lower interest rate), companies that provide debt relief negotiate with your creditors to lower your balance and help you get out of the red faster.
Debt relief, also known as debt settlement, isn't guaranteed. And it comes with risks, including a lower credit score, substantial fees and even lawsuits.
CNBC Select analyzed numerous debt relief companies and chose the top ones based on fees, availability, company history and customer satisfaction. (Read more about our methodology below.)
Best debt relief companies
Compare debt relief companies
Best for affordability
New Era Debt Solutions
Cost
14% to 23% of enrolled original debt
Highlights
New Era Debt Solutions has slightly lower fees than some of the other debt relief services we rated. It's been in business for 23 years, and is rated 4.93 out of 5 for customer satisfaction through the Better Business Bureau.
App available
No
Pros
- Accessible for Spanish speakers
Cons
- Not available in all states
Who's this for? New Era Debt Solutions' fees average 14% to 23% of your total enrolled debts, the lowest rates of the debt settlement companies we considered.
Standout benefits: New Era has a strong track record with customer satisfaction, including an A+ rating from the Better Business Bureau and BBB customer reviews that average a near-perfect 4.93 out of 5 stars.
Best for customer satisfaction
Americor Debt Relief
Cost
14% to 29% of enrolled debt
Highlights
Americor offers debt relief options for those with more than $7,500 of unsecured debt. It's been in business for over 15 years and also offers debt consolidation options. It's been accredited by the American Association for Debt Resolution and the BBB.
App available
No
Read our Americor Debt Relief review.
Pros
- Relatively low minimum debt required to enroll in the program
- A+ rating from the Better Business Bureau (BBB)
- Uses a soft credit inquiry to determine which offers you may qualify for
Cons
- Not available in all US states.
- Program fee can vary by state
Who's this for? Americor could be the one for you if customer service is a priority: The company's hundreds of customer reviews with the Business Bureau average 4.66 stars out of 5.
Standout benefits: Americor charges clients between 14% and 29% of enrolled debt, less than several competitors on this list. It also offers debt consolidation loans through online lender Credit9.
Best for larger debts
Pacific Debt Relief
Cost
15% to 25% of enrolled debt
Highlights
Pacific Debt Relief is highly rated for customer service, earning a 4.93 out of 5 according to the Better Business Bureau. Since 2002, the company has settled over $300,000,000 worth of debt.
App available
No
Pros
- Highly rated for customer satisfaction
- Accessible for Spanish speakers
Cons
- Only operates in 37 states.
- High $10,000 minimum of unsecured debt for debt relief.
Who's this for? Pacific Debt Relief requires clients to have at least $10,000 in unsecured debt, so it's a good match if you're carrying a lot of consumer debt.
Standout benefits: Pacific Debt Relief has resolved more than $500 million in unsecured debt since 2002. Its customer reviews with the Better Business Bureau average 4.93 out of 5 stars, one of the highest of the companies we considered.
Best for smaller debts
Freedom Debt Relief
Cost
15% to 25% of enrolled debt
Highlights
Freedom Debt Relief has been helping people get out of debt since 2002, and has resolved more than $18 billion of debt. Specializing in credit card debt, Freedom Debt Relief can help clients get started without fees up front and offers free credit card debt relief consultations.
App available
No
Pros
- A+ Better Business Bureau rating
Cons
- Not available in all states
Who's this for? Freedom Debt Relief requires clients to have at least $5,000 in unsecured debt, compared to many competitors that set the minimum at $10,000.
Standout benefits: Freedom Debt Relief will refund its fees if your settlement is greater than the amount originally owed when you enrolled in the program.
Best for quick debt payoff
Accredited Debt Relief
Cost
25% of enrolled debt
Highlights
Accredited Debt Relief has been in the business since 2011 and offers debt relief options to those with at least $10,000 of debt, including credit card debt, personal loan debt, and medical debt.
App available
Yes
Pros
- Free consultation
- Monthly payments reduced by as much as 45%
- A+ rating from the Better Business Bureau
Cons
- Need at least $10,000 in unsecured debt to enroll
- Fee can average 25% of your enrolled debt
- Not available in every state
Who's this for? Accredited Debt Relief is a good choice if you want to get back into the black faster. It says says clients who complete its payment program can be debt-free in as few as 12 months, compared to the 24 months most companies cite.
Standout benefits: Fees are success-based, so you don't have to pay if there's no settlement agreement. Accredited Debt Relief claims it can cut clients' payments by up to 45%.
Best for availability
National Debt Relief
Cost
15% to 25% of enrolled debt
Highlights
National Debt Relief has been in business since 2009, and has helped hundreds of thousands of people get out of debt. While National Debt Relief won't be a fit for people who owe less than $7,500, it can be a good option for those with large debts.
App available
No
Read our National Debt Relief review.
Pros
- A+ Better Business Bureau rating
Cons
- A minimum of $7,500 of unsecured debt is required to enroll
- Not available in all states
Who's this for? National Debt Relief operates in 47 states and the District of Columbia, the most of any company we reviewed.
Standout benefits: National Debt works with clients with as little as $7,500 in unsecured debt, which is less than many competitors.
Best for tax debt
Curadebt
Cost
Not disclosed
Highlights
While some debt relief companies won't work with tax debt, Curadebt will. Their tax debt services are available in all states except Pennsylvania, and has a 4.81 out of 5-star rating for customer satisfaction with the Better Business Bureau.
App available
No
Pros
- In business since 2000
- Works with state and federal tax professionals
Cons
- Not Better Business Bureau accredited
- Fees for tax debt relief are not disclosed online
Who's this for? CuraDebt is a good choice if you've got tax debt, as it's one of the only debt settlement companies that will work with the IRS and state revenue offices. It also provides audit representation.
Standout benefits: CuraDebt guarantees it will meet or beat any fee from another debt relief company accredited by the Better Business Bureau.
More on our best debt relief companies
Debt Relief Company Comparison
| Accredited Debt Relief | Americor | National Debt Relief | Freedom Debt Relief | New Era Debt Solutions | Pacific Debt Relief | CuraDebt | |
|---|---|---|---|---|---|---|---|
| Availability | 37 states | 49 states | 47 states | 32 states | 47 states | 30 states | 26 states |
| Minimum debt | $10,000 | $7,500 | $7,500 | $5,000 | $10,000 | $10,000 | Not disclosed |
| Fee | 25% | 14% to 29% | between 15% and 25%. | between 15% to 25% | 14% to 23% | 15% to 25% | 14% to 23% |
| Lower monthly payments by | Up to 45% | 40% or more | Up to 50% less than your monthly credit card payments. | Up to 30% | 50% or more | Not disclosed | Not disclosed |
| Average time to complete program | 12 to 48 months | 24 to 48 months | 34 months | 24 to 48 months | 24 to 48 months | 24 to 48 months | 24-48 months |
New Era Debt Solutions
Founded in 2001, New Era Debt Solutions is accredited by the Better Business Bureau and its 69 BBB reviews average 4.93 out of 5 stars.
Operates in
All states but Maine and Oregon
Minimum amount of debt required to enroll
Not disclosed
Fees for services (percentage of enrolled, unsecured debts)
14% to 23%
BBB rating
A+
Americor
Founded in 2008, Americor is an accredited member of the American Association for Debt Resolution.
Operates in
Every state except Colorado
Minimum amount of debt required to enroll
$7,500
Fees for services (percentage of enrolled, unsecured debts)
14% to 25%
BBB rating
A+
Pacific Debt Relief
Pacific Debt Relief has been helping people negotiate their debt since 2002 and has been accredited by the BBB.
Operates in
29 states and Washington, D.C.
Minimum amount of debt required to enroll
$10,000
Fees for services (percentage of enrolled, unsecured debts)
15% to 25%
BBB rating
A+
Freedom Debt Relief
Freedom Debt Relief has been in business for more than 20 years. The company has worked with over one million customers and resolved more than $18 billion in unsecured debt since 2002.
Operates in
42 states (excluding Colorado, North Dakota, Oregon, Rhode Island, Vermont, West Virginia, Wisconsin, Wyoming or Washington, D.C.)
Minimum amount of debt required to enroll
$5,000
Fees for services (percentage of enrolled, unsecured debts)
15% to 25%
BBB rating
A+
Accredited Debt Relief
Accredited Debt Relief has been in business since 2009 and has an A+ rating from the Better Business Bureau. Its hundreds of BBB reviews average 4.88 stars out of 5.
Operates in
37 states and Washington, D.C.
Minimum amount of debt required to enroll
$10,000
Fees for services (percentage of enrolled, unsecured debts)
25% of enrolled debt on average
BBB rating
A+
National Debt Relief
National Debt Relief has been helping clients get out of debt since 2009 and its reviews with the Better Business Bureau average 4.6 out of 5 stars.
Operates in
46 states and Washington, D.C. (excluding Connecticut, Oregon, Vermont and West Virginia)
Minimum amount of debt required to enroll
$7,500
Fees for services (percentage of enrolled, unsecured debts)
15% to 25%
BBB rating
A+
CuraDebt
CuraDebt has been helping clients with tax debts and unsecured consumer debt since 2000. Its reviews with the Better Business Bureau average 4.6 out of 5 stars.
Operates in
26 states and Washington, D.C.
Minimum amount of debt required to enroll
Not disclosed
Fees for services (percentage of enrolled, unsecured debts)
14% to 23%
BBB rating
A+
How to choose a debt settlement company
Before choosing a debt relief or settlement company, make sure that you've tried all other options. You might want to consider a non-profit credit counseling service as an alternative, which can help you make a debt management plan.
The Consumer Financial Protection Bureau (CFPB) also recommends contacting your state Attorney General or any local consumer protection agencies to ensure there aren't any consumer complaints on file about the company. The office can also tell you whether the company you're considering is licensed in your state if required.
You'll want to beware of companies that:
- Charge upfront fees before settling debt
- Makes guarantees on debt settlement
- Tells you to stop communicating with creditors
To find a good debt settlement company, you'll want to consider the fees involved and make sure that they cover the type of debt you're working with. Then, consider reviews and current customer satisfaction.
What is debt settlement?
Debt settlement is a process of negotiating debts to lower the amount you owe. Once an agreement has been reached, the debt settlement company will pay the amount in a lump sum from the cash you've saved.
While it may sound appealing to pay a smaller amount than you owe, you'll want to consider the potential damage to your credit score — missing monthly payments while saving for a settlement instead and paying less than you owe can both negatively affect your credit score. You'll also need to pay taxes on the amount forgiven as income, and if you use a company, pay a hefty fee typically between 15% and 25% of your enrolled debt.
How debt settlement works
Debt settlement helps those with large amounts of unsecured debts — like personal loans, credit card debt, and private student loans — lower what they owe.
When you work with a debt settlement company, you'll typically put aside money in a specific savings or escrow account. Once you save up enough money, the company will begin calling your creditors and negotiating on your debts to lower what you owe.
Once an agreement has been reached, the company will use the funds from your savings or escrow account to pay off the agreed amount and settle your debt. You'll then pay a fee to the company you hired.
Pros and cons of debt settlement
Debt settlement can be a way to get out of debt. But you'll want to consider several pros and cons before starting a service.
Pros of debt settlement
- You can reduce your debt. Negotiations can lead to different types of resolution, but you'll generally end up paying less than what you owe.
- You'll have a timeline for repayment. You'll typically be enrolled in a program between 24 and 48 months.
- Many companies offer free consultations. You'll be able to see if it is a fit for you without a financial commitment upfront.
Cons of debt settlement
- Results aren't guaranteed. Not even the most reputable debt settlement company can guarantee successful resolution.
- Your credit score could decrease. The estimated credit score decrease after debt settlement is around 100 points, according to the National Foundation for Credit Counselling.
- It can be expensive. Many companies we considered charge fees between 15% and 25% of the unsecured debt enrolled in the program.
- It could raise your tax bill. Debt settlement works by getting creditors to take less than what you owe on your debts. The amount forgiven generally becomes taxable income you're responsible for paying taxes on.
Debt settlement vs. debt consolidation
Debt settlement relies on negotiating down the amount of debt you owe and is generally done by companies that charge a fee for their services. Debt relief companies generally encourage clients to stop paying bills on their debts that are enrolled in the program and instead save for settlements in a savings account.
Debt consolidation, however, is generally done on your own. This process relies on a personal loan to pay off debt, then leaves the personal loan as your main debt to pay down. It can help you keep track of your debts better by rolling them into one debt, and in some cases, it can lower the interest rate you'll pay for some high-interest debts.
Here are CNBC Select's top debt consolidation loans to consider:
- Best for student loan consolidation: SoFi
- Best for fair/average credit: Upstart
- Best for consolidating debt while improving financial literacy: Upgrade
- Best for staying motivated: Happy Money
- Best for good to excellent credit: LightStream
- Best for joint applicants: Prosper
Is debt settlement right for you?
Debt settlement should likely be a last resort since it can be risky. There's a chance that a company won't be able to solve all of your debts, according to the CFPB, and that your overall debt will increase instead of decrease when you stop making payments. And, if you're on a tight budget, it could be costly — if you're charged a 25% fee and enroll $20,000 worth of debt, for example, you'll pay a fee of $5,000 if that debt is settled.
Before you try debt settlement, you might want to try alternatives like debt consolidation, or credit counseling through a non-profit.
FAQs
What is debt settlement?
Debt settlement, sometimes called debt relief, refers to a variety of services that can reduce your debt. Debt relief companies negotiate with creditors to lower the amount you owe on personal loans, credit cards and other unsecured debts. They generally don't work with loans backed with collateral, like mortgages and auto loans.
What does a debt relief company do?
Typically, a company will reach out to your creditors to negotiate a lower amount for you to pay. During this process, clients are usually asked to stop making payments to their creditors and instead put money into a special savings account. If an agreement is reached, the debt relief company will use the funds in the account to pay off the negotiated amount.
How long does debt settlement take?
The length of the process depends on your settlement agreement and the amount of debt you have. Most companies claim that clients who maintain consistent payments can complete the program in two to four years.
How much does debt relief cost?
Debt relief generally costs between 15% and 25% of the total amount of unsecured debt enrolled in the program.
Will a debt settlement program hurt my credit?
Since you'll be stopping payment to your creditors, debt settlement can damage your credit. According to the National Foundation for Credit Counselling, your credit could drop as much as 100 points. If you a debt settlement company successfully lower the amount you owe, your score should go back up as you make payments.
Can I do debt relief myself?
You can always reach out to your creditors to try and negotiate for a lower amount, less interest or more time to repay the debt. It will take time and persistence, which is why many people turn to experienced professionals. You can also consider a debt consolidation loan, which will roll all your debts into one payment and potentially decrease the interest rate you're paying.
Bottom line
Debt settlement is one way to pay off debt, but it could mean sacrificing your credit score, paying additional fees and owing more in taxes. If you've exhausted all other options and are still struggling, a debt relief company could reduce the amount you owe and help you pay off your debt.
Read more
Why trust CNBC Select?
At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every debt relief review is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of debt relief products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics. See our methodology for more information on how we choose the best debt relief companies.
Our methodology
To find the best debt relief companies, CNBC Select analyzed more than a dozen U.S. debt relief companies.
When narrowing down and ranking the best debt relief companies, we focused on the following features:
- Fees. Most debt relief companies charge fees for their services. We focused on those with the lowest fees. Additionally, we focused on those who are transparent about those costs and display them on their websites.
- Better Business Bureau accreditation. To be BBB accredited, companies must meet standards for transparency, honest advertising, trustworthiness, responsiveness and privacy, among other things.
- Customer satisfaction ratings. The BBB measures customer satisfaction through ratings left on its website. We considered both the rating and the number of reviews received.
- History. We considered the number of years a debt relief company has been operating.
- States where service is available. We considered the number of states where the service is available, prioritizing those that were more widely available.
All of the companies on this list are accredited by the American Fair Credit Council (AFCC).
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