Best debt relief companies of December 2024

With debt settlement, you pay less than you currently owe to your creditors. Debt settlement companies typically advise you to start saving the money you’d usually spend on credit card payments and other debts in a separate savings account. The next step is to stop paying your creditors so the company can negotiate on your behalf to settle your debts for less than the balance due. 

Debt settlement has a few potential risks.

• You could damage your credit score: Halting payments on your debts can hurt your credit score. Lenders will consider any unpaid amount delinquent.
• You can negatively impact your credit report: Debts will appear as “settled” on your report, which tells other lenders you didn’t pay the debt according to your original agreement.
• Your creditors could refuse: Creditors aren’t required to work with the debt settlement companies and may continue to charge you interest and late fees for late payments on your debts.
• Your creditors could sue you: Your creditors may sue you to recover losses if they choose not to work with your debt relief company and you don’t make any payments. 

Companies offering debt management options often work with you to come up with a plan for debt payments after reviewing your income and expenses. A credit counselor may be a good resource for this, or you can try try DIY debt payoff plans, like the avalanche or snowball payment methods. 

Debt consolidation lets you combine several credit accounts with the help of a loan or credit card. Unlike debt settlement, debt consolidation requires you to pay your full balance. However, it does not damage your credit score (so long as you keep up with payments) and may help you find a lower interest rate. It is best for those who want to simplify their payments and have a healthy enough credit score to qualify for improved rates. 

The debt relief companies on this page are not lenders — try our roundup of best debt consolidation loans if you want to explore this option.

Debt relief companies typically require their customers to have at least $10,000 in debt they can’t repay — though some require only $7,500. If your outstanding debt is under that threshold, you may be better off exploring other options, such as debt consolidation loans or credit counseling.

Most debt settlement companies state their process takes between 24 and 48 months. Compare time frames from different companies to choose the best option for your settlement. 

Debt relief companies typically charge a closing fee equal to between 15 percent and 25 percent of the total debt enrolled. Some may also charge a one-time account setup fee and a monthly service fee. 

However, it is illegal for debt settlement companies to charge upfront fees for their services. If you see such a fee, choose a different company.

No company can keep a promise to settle your debt, and if they do, avoid them. Don’t ever pay an upfront fee of any kind. Debt relief representatives should be honest about the potential benefits and drawbacks. If you feel like you’re being pressured to accept the plan, choose a different company that isn’t using aggressive tactics to do business with you. 

Check the company’s reputation on websites like Better Business Bureau or Trustpilot. The Consumer Financial Protection Bureau’s complaint database is also worth checking for serious complaints against a particular company.

Reorganizing your budget could help you free up cash to avoid future credit use. Focus on freeing up your monthly budget to reduce unnecessary credit use or spending. For example, canceling subscription services or eliminating unnecessary insurance protections. 

A bad credit loan may allow you to pay off high interest rate credit cards or consolidate multiple accounts into one payment. You can choose terms of as long as seven years to keep your payment low, and you’ll receive all your money at once with a fixed monthly payment.  

Also known as a second mortgage, a home equity loan allows you to borrow against your equity. They may offer a lower interest rate than you’ll get on a credit card or personal loan. You’ll usually need a credit score of at least 620 to qualify and defaulting on your payments could lead to foreclosure.

A HELOC is like a credit card secured by your home. You can use and reuse the credit for a set time period, and your payment is only based on the amount you use. While rates are typically lower than other loans, be aware that you could lose your home if you can’t make the payments. 

With a cash-out refinance, you borrow more than you currently owe on your mortgage and pocket the difference with a new mortgage. Some programs, like the FHA cash-out refinance, may approve you with scores as low as 500. However, many lenders set higher minimums. You also need more than 20 percent equity for it to make sense, and you could lose your home if you can't repay the loan.

Availability is assessed based on the minimum debt balance required, types of eligible debt and whether the company provides free credit counseling.

Affordability is assessed based on associated fees and whether the company specifies money-back guarantee terms.

Customer experience is assessed based on website usability and features, customer support options and hours of operation.

Company reputation is determined by assessing complaints with regulatory agencies, like the Federal Trade Commission and Consumer Financial Protection Bureau.

Stability ratings are based on how long the company has been in business and whether it maintains membership with a professional trade association.