In certain situations, debt settlement is the best approach to clearing up debts and getting your finances back in hand. A far better alternative than filing for bankruptcy protection, settlement deals usually drop off of your credit history within seven years where bankruptcy has a 10-year tenure.
Moreover, with settlement, you can answer no when subsequent loan applications ask if you’ve ever had a bankruptcy. One of the keys to a successful settlement program is find a good company with which to work. U.S. News and World Report announces the best settlement companies each year.
Here, we’ll take a look at its current crop, as well as providing an overview of how debt settlement works in general.
How Does Debt Settlement Work?
Working with a debt settlement firm gets you an advocate who approaches your creditors with proposals to settle your outstanding debt for less than you owe in exchange for a one time payment in full of the agreed-upon amount. Rather than paying your creditors directly, you’ll deposit funds into an escrow account, from which your debt settlement agent will draw funds with your permission to pay off the accounts as settlement understandings are reached.
The Best Debt Settlement Companies
U.S. News conducted research investigating debt settlement programs. They found going with a best debt settlement company like Freedom Debt Relief gets you assurances from organizations such as the International Association of Professional Debt Arbitrators and the American Fair Credit Council. They also assessed core considerations like fees, settlement timeline, kinds of debt, consumer feedback, and guidelines for the debt.
Freedom Debt Relief
The California based debt settlement company has over 650,000 satisfied customers after resolving over $10 billion in debt since launching in 2002.
Why Use Them?
Debts Accepted: Unsecured debt, medical bills, credit cards
Fees: Ranges from 15% to 25% of the settled amount
You should have a minimum of $7,500 credit card debit to apply and the account may be several months past due.
They pay debts off within 24-48 months
National Debt Relief
Based in New York, National Debt Relief is an accredited debt settlement company established in 2008. National Debt Relief specializes in consumer debt resolutions and is one of the largest debt settlement companies in the nation.
Why Use Them?
Types of debt settled: Personal loans, unsecured debt, business debt, medical bills, lines of credit, student debt, credit cards
Fee: Settlement fees range from 15% to 25% of the enrolled debt
You need to have gained at least $7,500 of debt before joining
Pacific Debt Inc.
Pacific Debt Inc. is an accredited company and offers its services worldwide. The San Diego-based debt settlement company has handled more than $300 million in assets in debt since 2002.
Why Use Them?
Types of debt settled? Private, student loans, medical bills, credit cards, unsecured debt, personal loans
Fee: Typically, settlement fees are from 15% and 25% of the enrolled amounts
Consumer debts are satisfied in 24 to 48 months
DMB Financial
DMB Financial is a debt settlement company based out of Massachusetts. The accredited firm has saved clients millions of dollars in debt.
Why Use Them?
Types of debt settled: Unsecured debt
Fee: This company isn’t disclosing its fees
It will take up to 48 months in some instances to resolve some debts.
The company earns an excellent rating at the Better Business Bureau (BBB)
Debt settlement is often the lease expensive way to get out of debt. However, it depends upon how much you owe, how far behind you are in payments and your ability to gather the funds you’ll need to pay off the settlement agreements.
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