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Compare Great Debt Relief Companies of 2024

Debt relief can ease the burden of overwhelming debt.

Shop some of the great debt relief companies of 2024.

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THE BOTTOM LINE

NerdWallet partners with Freedom Debt Relief to provide customers with over $7,500 in credit card debt with settlement options to help them become debt-free in 2-4 years by reducing their monthly payments by 20% or more.

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NerdWallet partners with Accredited Debt Relief to provide customers with over $20,000 in credit card debt with settlement options to help them become debt free in 2-4 years by significantly reducing their monthly payment.

THE BOTTOM LINE

NerdWallet partners with National Debt Relief to provide customers with over $7,500 in credit card debt with settlement options to help them become debt-free in 2-4 years by reducing their monthly payments by 23% or more.

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Debt relief basics

How debt relief companies work

Debt relief companies negotiate on your behalf to change terms or amount of your debt so you can get back on your feet more quickly. This is sometimes called "debt settlement."

Debt relief programs are not the right solution for everyone, and it's important to understand their potential risks. Success is not guaranteed, and the cost could be higher than negotiating on your own.

When to use a debt relief company

Consider using a debt relief company for debt settlement when:

You have no hope of repaying unsecured debt (credit cards, medical bills, personal loans) within five years, even if you take extreme measures to cut spending.

The total of your unpaid, unsecured debt equals half or more of your gross income.

Frequently asked questions about debt settlement

Debt settlement is a last resort for those who face overwhelming debt but cannot qualify for bankruptcy or simply don't want to file bankruptcy.

Companies that offer debt settlement services typically ask you to stop making debt payments when you enroll in a settlement plan and instead put the money in an escrow account. Each creditor is approached as the money accumulates in your account and you fall further behind on payments. The debt relief company then negotiates with the creditor to accept a smaller lump-sum offer and agree not to pursue you for the rest.

You could end up owing more: Beware that you could end up with debts that are even bigger than when you started, according to the Consumer Financial Protection Bureau. Late fees, interest, and other charges related to credit card debt could make your debt balloon - because many debt settlement companies will ask you to stop making debt payments to try to sway creditors into negotiating.

Creditors can still try to collect from you: Not paying your bills can result in collections calls, penalty fees and, potentially, legal action against you. Lawsuits can lead to wage garnishments and property liens. Debt settlement won't stop any of that while you're still negotiating, and it can take months for settlement offers to begin.

Reduced credit score: Your credit score could take a hit while you are not making payments.

Depending on how much you owe, it could take several years to resolve your case. The typical timeframe for these companies is two to four years.

No. Debt consolidation is something you do on your own and is not the same thing as using a debt settlement via a debt relief company.

Common pitfalls to avoid when you're in debt

For anyone who is overwhelmed by debt, our experts recommend avoiding these mistakes.

Neglect secure debt

Don't prioritize unsecured debt (like medical bills or credit cards) over secured debt (like a car payment). Always pay secured debt first to avoid losing your collateral.

Tap into your home equity

If you borrow against your home equity to pay unsecured debt, you're putting your home at risk of foreclosure. Also, your unsecured debt can be wiped out in bankruptcy, but this type of debt cannot.

Dip into your retirement

Don't withdraw money from your retirement savings or work retirement accounts to repay unsecured debt. This reduces your overall financial stability, and your may incur penalties for the withdrawal.

Give in to pressure

When a creditor is pressuring you to pay, you'll naturally want to pay them first, but it may not be the best choice. Take your time to research your options and make a debt management plan that's best for you.