If you’re having financial trouble, numerous debt relief organizations and debt settlement plans can assist you in rebuilding your credit. The top debt settlement firms can assist you in avoiding bankruptcy, paying off your debt more quickly, and settling it for less than you owe. However, selecting the best debt settlement firm is difficult given the wide range of debt relief solutions available. While some businesses focus exclusively on debt settlement, others also provide additional services, including credit counseling and debt management programs. Hence, to help you, we’ve analyzed the best and worst debt relief companies, what to do with them, and nonprofit debt relief companies. So, read on!
What Are Debt Relief Companies?
In most cases, debt settlement companies can negotiate reduced settlement amounts with your creditors. Though it may seem like a good idea at first, using this service might negatively affect your credit, set you back a lot of money, and isn’t even guaranteed to work. Debt settlement companies are often seen as a last resort due to the dangers involved. However, if that’s your only choice, you must do business with a trustworthy firm.
The American Fair Credit Council (AFCC) recognizes the best debt settlement companies as those that are upfront about their fees, have a proven track record of happy clients, and exhibit these qualities.
What Do Debt Relief Companies Do?
Debt relief companies are private, for-profit organizations that take a cut of any settlement reached between you and your unsecured debtors. The purpose of these services is to negotiate a reduced settlement sum with your creditors. Debt reduction is a common selling point for these organizations. The practices used by debt relief companies when dealing with creditors might severely damage your credit. Meanwhile, below are some of the unavoidable truths about how they function:
The debt relief company contacts your creditors on your behalf after you’ve been making payments into the account for a while, effectively making the case that the creditors would be better off accepting partial repayment of your debt than taking the chance of receiving no payment at all. The major concern is that if you file for bankruptcy, your creditors might not be able to get anything you owe them because you’re at the end of your financial rope.
However, if the debt settlement firm is successful in its discussions, it will normally keep 20% to 25% of your entire debt as payment and may impose costs (for keeping your savings in the account, for instance) as it pays down the decreased debt on your behalf.
Best Debt Relief Companies
The best debt relief companies include the following:
#1. National Debt Relief
When it comes to resolving unsecured debt, this is one of the best options available. Over 400,000 customers’ debts have been eliminated since the company’s start in 2009. Both the Better Business Bureau and the American Fair Credit Council have recognized its high standards and awarded its accreditation.
There are also many five-star reviews from pleased consumers. Its website features helpful materials for teaching personal finance, such as a savings calculator.
#2. Freedom Debt Relief
The debt settlement company Freedom Debt Relief (FDR) has been around for over 15 years and has settled over $15 billion in debt. It also has the distinction of being an AFCC charter member. More than 550 licensed debt consultants and more than 200 debt negotiators are on staff at the organization.
Freedom Debt Relief is one of the few companies that will negotiate a settlement on your behalf for commercial and private school loans. No fees are due from the client until they have approved the deal and made their first settlement deposit. Your state of residence will decide the exact cost percentage, which might range from 15% to 25% of your total debt. Also, you can monitor your development at any time with the help of an online dashboard.
#3. CuraDebt
CuraDebt is the only organization that can help people with tax bills in a way that other organizations can’t. In addition to its standard debt settlement options, this initiative gives customers the chance to eliminate their debt for a fraction of what they owe.
#4. Accredited Debt Relief
This is also one of the best debt relief companies that have the potential to cut your debt by as much as half. This debt settlement organization could be a good choice if you want to avoid bankruptcy and be free from debt in 12 to 24 months.
#5. Community Tax
Community Tax is a great option among other debt relief companies if you have tax debt and need help paying it off. This firm provides comprehensive tax services, including acting as your representative in talks with the internal revenue service.
Worst Debt Relief Companies
It isn’t always easy to discern the difference between a debit relief company that can do what it claims to do and one that is just trying to capitalize on people’s vulnerability. Debt relief companies claim they can negotiate with creditors on your behalf, reduce the total amount you owe, and combine all of your separate obligations into one manageable monthly payment. However, it often causes more problems than it solves. Hence, to begin with, the cost of this service is added to your existing balance. It may not work, it may take longer than you anticipate, and it may even ruin your credit if you do it wrong. Worse, there are many dishonest people and fly-by-night operations masquerading as legitimate enterprises on the internet.
However, to assist you, we’ve researched and compiled a list of the worst debt relief companies, according to the public’s views. Thus, they include the following:
#1. Credit Associate
This is one of the worst debt relief companies, even though it has a high review on TrustPilot and hides its fees. As a way to get started, the website offers a free credit score, but it is not clear how the application process will affect your real credit score.
Although it received a B from the BBB, it is not BBB-accredited and has a poor rating of 2.37 based on only 19 customer reviews. There are many more complaints about the hasty and deceptive application procedure and the inability to cancel.
#2. Global Client Solutions
Even though Global Client Solutions has been in business for 17 years and has a BBB rating, there are too many red flags to trust them. According to BBB ratings, it only has 1.79 stars from customers. Even Consumer Affairs gives it a dismal 1.2 out of 5 stars.
Due to the company’s improper handling of debt settlement payments, the Consumer Financial Protection Bureau filed suit against it in 2014, seeking millions of dollars in damages. It was still fielding complaints about hidden fees and fraudulent activities as recently as February of this year.
#3. The Case for Lexington Law
The BBB has upgraded Lexington Law to a C, but the organization is still not accredited. Over the past three years, it has resolved 670 complaints, including 280 in the past 12 months. More than 300 customers have reviewed Lexington Law, and it only receives 2.02 stars. Furthermore, several reviewers have likened the experience to a scam, with many customers complaining about hidden costs and a general lack of responsiveness.
Nonprofit Debt Relief Companies
Nonprofit debt relief companies are a lifesaver when growing credit card debt gets overwhelming. Their advisors can help you consolidate your debt into one manageable monthly payment, and they may even be able to lower your interest rate and waive any applicable fees. Their methods for getting out of debt are not too expensive, and in some cases, they even help for free. In addition, nonprofit debt relief companies provide a wealth of free financial tools, including budgeting guides, debt calculators, and personal finance workbooks. These calculators may calculate everything from how long it would take to pay off a credit card if you only paid the minimum each month to how much of a down payment you’ll need for a house, depending on home loan interest rates. Nonprofit debt relief companies can also provide pre- and post-bankruptcy credit counseling.
How Does Nonprofit Debt Relief Companies Work?
You won’t need a loan to engage with any of the nonprofit debt relief companies to get your debts under control. Instead, your credit counselor will work with your creditors to consolidate your debt into one monthly payment. Consolidating your bills into one monthly payment can save you money. Your counselor may reduce your interest rate and eliminate over-limit and late fees with the debt treatment plan.
Furthermore, when you have a strategy for managing debts in place, your monthly payments will be sent to the debt relief company. Then, they will disburse the funds to your various creditors. This process continues until all outstanding invoices have been settled. Also, the budget you create with the advice of your counselor will help you manage your money and stay out of debt. In addition, you can work with nonprofit debt relief companies to merge your unsecured debt.
How Much Do Debt Relief Companies Charge?
The majority of debt relief companies charge 15% to 25% of the total amount of your debt as a fee for their services. So, if you owe $10,000, the debt relief company’s services could cost you up to $2,000.
Is There Really a Federal Debt Relief Program?
There is no one program that can help everyone with their personal debt. However, there are local initiatives that assist people who are having trouble making ends meet. Illness and the accompanying expenses for medical care are one of the primary causes of financial strain.
What Does It Take To Qualify for Debt Relief?
National Debt Relief helps consumers with $7,500 to $100,000 in unsecured credit card, corporation, and corporate student loan debt.
Does Freedom Debt Relief Ruin Your Credit?
Collaborating with Freedom Debt Relief, as is the case with working with any other debt settlement organization, will normally cause an initial dip in your credit score. It’s possible that you’ll go quite a ways, depending on the circumstances.
Why Is Debt Relief Bad?
Your creditors may deem the money you save from a successful debt settlement arranged by you or a third party as taxable income. Also, after you pay off your debts, you may need to make a tax payment on the amount.
Can I Do Debt Relief Myself?
Yes, you can. You’ll need to conduct an in-depth analysis of your purchasing behaviors, financial plan, and outstanding debts. It also requires making phone calls to your creditors and asking for reductions in the interest rates and costs associated with your credit cards. The fact that many banks are eager to work with persons and will take your call despite the apparent difficulty of the situation may give you pause.
Disclaimer Disclosure
We conclude from our research that the best and worst debt relief companies mentioned in this post are simply the opinions of the public. However, we suggest that you do your own study because we won’t be responsible for any good or bad things that happen.
How Do You Qualify for Debt Relief?
There are a few requirements to be eligible for the settlement program offered by National Debt Relief. You need to be at least two or three months delinquent on payments and have debts totaling more than $7,500. In addition, you must be able to afford a set regular payment to National Debt Relief.
How Long Does Debt Relief Stay On Your Record?
In most cases, a debt relief order is in effect for one year. However, it will remain on your credit report for six years from the approval date, during which time it will affect your credit score. This is because it will be visible to prospective lenders.
References
- timesunion.com
- forbes.com
- dallasnews.com
- investopedia.com
- timesunion.com
Related Articles
- BEST DEBT RELIEF COMPANIES: Top Best Debt Relief Companies
- DEBT SETTLEMENT COMPANIES: Top Companies & Reviews
- TAX RELIEF SERVICES: What It Is, Cost and Free Tax Relief Services
- DEBT SETTLEMENT: How It Works and Processes
- WHAT IS A LAWSUIT: What You Need Know, Examples & Difference
- ANESTHESIOLOGIST NURSE: Definition, How to Become One, Salary & Requirements
