National Debt Relief Review: Does Debt Settlement Work?

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National Debt Relief is a debt settlement company that negotiates on behalf of consumers to lower their debt amounts with creditors.

Consumers who complete its debt settlement program reduce their enrolled debt by 30% after its fees, according to the company.

But NerdWallet cautions that debt settlement, whether through National Debt Relief or any of its competitors, is risky:

  • Debt settlement can be costly.

  • It can destroy your credit.

  • It takes a long time. Getting any net benefit requires sticking with a program long enough to settle all your debts — often two to four years.

NerdWallet recommends debt settlement only as a last resort for those who are delinquent or struggling to make minimum payments on unsecured debts and have exhausted all other options. For many consumers, bankruptcy is a better option as it offers a faster route to resolving debt. And bankruptcy generally protects consumers from being sued, which is a risk while enrolled in a debt settlement program.

Working with National Debt Relief

How to qualify: National Debt Relief works with consumers who have at least $7,500 and up to $100,000 in unsecured debt from credit cards, personal loans and lines of credit, medical bills, business debts and private student loan debts.

National does not settle debt from lawsuits, IRS debt and back taxes, utility bills or federal student loans. It can't settle auto or home loans, or other types of secured debts (debts with collateral).

The average client has more than $20,000 in total debt, according to Grant Eckert, chief marketing officer at National Debt Relief. National does a soft credit pull during the application process to verify your creditors and outstanding balances owed on each debt, according to Eckert. A soft credit pull does not affect your credit score.

Due to varying state regulations, National is not available in these states: Connecticut, Georgia, Kansas, Maine, New Hampshire, Oregon, South Carolina, Vermont and West Virginia.

The debt settlement process: Once you hire National Debt Relief, you open a separate savings account in your name. Then, rather than paying your creditors, you deposit a monthly payment to this account. National determines the monthly payment level, which is often lower than the total monthly payments on customers’ unsecured debts.

Ceasing payment to your creditors means you become delinquent on your accounts, accruing late fees and additional interest, and your credit score will tumble.

National then negotiates with individual creditors on your behalf in an effort to get them to accept less than the amount you owe. Because you're no longer paying the creditor, it may view getting a reduced amount as better than risking no payment at all.

If they reach an agreement, you pay the creditor from your savings account, either a lump sum or with installment payments. The first settlement typically happens within three to six months, according to Eckert.

Cost: The company collects a fee when a debt is settled. In 2010, the Federal Trade Commission made it illegal for debt settlement companies to charge upfront fees.

National’s fee varies between 15% to 25% of your total enrolled debt, depending on the amount you owe and the state you live in.

Debt settlement programs also typically require setup and monthly fees to maintain the savings account. National did not confirm whether its programs require this fee.

Savings: National Debt Relief claims its clients realize an approximate savings of 30% when including its fees. This savings applies only to clients who stay with the program until all of their debt is settled. While National says the majority of people who enroll in the program complete it, some customers drop out for various reasons, including the inability to save enough money to settle debts.

Timeframe: On average, the company says, customers who complete their debt settlement program with National do so within two to four years.

National Debt Relief at a glance

National Debt Relief vs. Freedom Debt Relief

Average savings: National Debt Relief says its clients see savings of about 30%. By comparison, competitor Freedom Debt Relief says its customers see savings of 15% to 35% when including fees.

Minimum debt requirement: National Debt Relief requires a minimum of $7,500 in unsecured debt to qualify, the same amount as Freedom.

Customer experience: The company is accredited by the Better Business Bureau with an A+ rating and around 80 customer complaints in the past three years. The complaints centered on problems with the product or service, billing and collection issues, and advertising and sales issues.

Freedom Debt Relief has more than 350 customer complaints at the Better Business Bureau in the same timeframe.

Risks of debt settlement

Debt settlement comes with serious costs and risks, including:

Your credit score will plummet: Because debt settlement requires you to stop making payments on your outstanding debts, late payments will show up on your credit reports, and your credit scores will drop.

Furthermore, each settled account will be listed on your credit reports for seven years from the date the account first became delinquent, which can also hurt your credit scores.

You may still hear from creditors or debt collectors: There’s no guarantee your creditors will want to work with National Debt Relief, and you may be contacted by debt collectors or even be sued by creditors during the process.

Interest and fees continue to accrue: If you enter a debt settlement program, your accounts will become or stay delinquent, which will result in additional interest and late fees. If you don't stick with the program to completion or if National can't negotiate a settlement, you may end up stuck with the higher balance.

Forgiven debt may be considered taxable income: Forgiven debts over $600 may be counted as income on your taxes. Creditors may send a 1099-C form to you in the mail and to the IRS. One exception is if you are insolvent (your liabilities exceed your total assets) at the time the company settles with your creditors.

National Debt Relief vs. other options

The majority of clients who enroll with National Debt Relief are not delinquent on their debt, says Eckert. Rather, they’ve been making on-time but only minimum payments, or are on the verge of falling behind.

For many people in this situation, there are alternative debt payoff and debt relief options.

Debt management plan

You’ll pay a nonprofit credit counseling agency to consolidate your debts into one monthly payment, while also reducing your interest rate, in an effort to pay off your debt faster. This is a good option for consumers in credit card debt who have a steady income to repay the debt within three to five years. Unlike debt settlement, a debt management plan should help improve your credit score.

Debt consolidation

With debt consolidation, you transfer multiple debts into one new debt via a balance transfer credit card, debt consolidation loan, home equity loan or line of credit, or 401(k) loan. The new debt should have a lower interest rate, which can make payments more manageable and help you pay off the debt faster, while avoiding wrecking your credit.


Bankruptcy lets you resolve your debt under protection from a federal court. Chapter 7 bankruptcy erases most debts in three to six months and wipes the slate clean, and you may get to keep certain assets. It’ll stop calls from collectors and prevent lawsuits against you. Like debt settlement, your credit will suffer, but research shows credit scores rebound quickly.

DIY debt settlement

You can pick up the phone, call your creditors and negotiate with them yourself. As with using a debt settlement company, success isn't guaranteed, but especially if you owe only a few creditors, it could save you time and money.