The best debt relief companies of 2021
Debt relief companies help consumers avoid bankruptcy and get their credit back on track. Most debt relief companies are actually debt settlement companies whose ultimate goal is helping you settle your debt for less than what you owe. Their services are never free, and some companies charge significant fees for their help.
When your debts are overwhelming, reaching out to a third-party company might be your only option. We compared all the top debt relief companies to help in your search, focusing our efforts on finding firms that are honest, ethical and transparent, with a proven history of helping people get out of debt.
What are debt relief companies?
A debt relief company is a business that negotiates with creditors on your behalf to attempt to reduce, cancel or settle your outstanding debts. In addition to debt settlement, some debt relief companies offer options such as debt management plans and debt consolidation.
With debt settlement plans, consumers are required to stop paying debts during the negotiation process, which can cause further damage to their credit scores. However, debt settlement companies justify this by informing consumers that the hit to their credit is temporary, and that settling their debts will help them boost their scores later on.
Generally, a debt settlement company will set up a savings account that you’ll deposit money into for a set amount of time. The company will then use this account to prompt a negotiation, or even a settlement, with your creditors. The idea is to convince your lenders that you’re unable to pay back the borrowed amount and that receiving funds from the savings account is better than getting no money at all should you declare bankruptcy.
Debt settlement companies often charge 15 percent to 25 percent of the amount of your debt for their services, as well as expensive fees for maintaining the savings account.
Bankrate’s top debt relief companies for 2021
- Best for debt settlement: National Debt Relief
- Best for no up-front fees: New Era Debt Solutions
- Best full-service debt relief: CuraDebt
- Best for free consultations: Accredited Debt Relief
How we chose the best debt relief programs
Because many debt relief companies suggest debt settlement plans that can cause your credit score to plummet, these firms have gotten a bad reputation. However, there are plenty of reputable companies offering needed assistance.
To come up with our ranking of the best debt settlement companies of 2021, we considered several factors, including accreditation with the Better Business Bureau (BBB), third-party reviews, overall transparency and overall services offered. As you look over our list of the top debt settlement companies, keep in mind that not all of these companies offer their services in every state.
Best for debt settlement: National Debt Relief
National Debt Relief is one of the top companies offering debt relief nationwide, and that shows in its overall rankings and reviews. This company has an A+ rating with the BBB, and it has received numerous accolades for its debt settlement and debt consolidation offerings.
National Debt Relief lets consumers call and speak with debt counselors for free, and you can use the company for debt settlement. National Debt Relief’s stated goal is to offer common-sense alternatives to bankruptcy that help consumers get back on track and on with their lives.
Best for no up-front fees: New Era Debt Solutions
New Era Debt Solutions is another top debt relief company with excellent reviews and an A+ rating from the BBB. It claims to have helped consumers settle over $250 million in debt since 1999. New Era Debt Solutions offers a speedy debt solution that helps you settle for less than what you owe.
New Era Debt Solutions also charges no up-front fees. Like all debt settlement companies, however, it claims its total fees are “performance-based,” meaning you’ll typically pay fees as a percentage of debt that is ultimately settled.
New Era Debt Solutions offers a free debt analysis over the phone or online.
Best full-service debt relief: CuraDebt
CuraDebt is another debt relief company you should consider since this firm has an A+ rating with the BBB as well as plenty of five-star reviews. This company helps consumers settle debt for less than what they owe, but it can also help initiate debt consolidation and tax debt relief with states and the federal government.
CuraDebt makes it possible to speak with a debt counselor and get a free quote for services over the phone. You can also fill out some basic information about your debts and quickly see if you qualify. If you do meet the criteria for its debt relief programs, CuraDebt experts can walk you through the process.
Best for free consultations: Accredited Debt Relief
Accredited Debt Relief also has an A+ rating with the BBB and receives great reviews from third-party ranking sites such as Trustpilot. This company stands out for its free consultation, which includes a debt analysis and an overview of its programs and how they might work for you.
Accredited Debt Relief offers standard debt settlement plans, but it can also assist with debt consolidation, debt management and bankruptcy. A qualified expert will look over your situation and walk you through your options and anticipated costs before you decide to commit.
4 debt relief options to consider
Here’s a basic overview of four debt relief strategies consumers could consider.
1. Do-it-yourself debt relief
For the most part, debt relief companies can’t do anything for you that you can’t do yourself. It’s possible for you to call your creditors and try to negotiate a lower interest rate on your own.
2. Debt settlement
Debt settlement companies ask you to stop paying on your credit cards and other debts and start saving those payments in a separate savings account instead. The company will then work on your behalf, negotiating to let you settle your debts for less than what you owe. Keep in mind that debt settlement has risks, including the fact that halting payments on your debts can hurt your credit score. Also note that your creditors have no obligation to work with your debt settlement company, meaning you may not get the help you need in the end.
3. Debt management plans
Debt management plans ask you to deposit a set amount of money into a separate bank account each month. The credit counseling agency will distribute funds to your creditors from this account each month, and they’ll also negotiate on your behalf for lower interest rates and better terms. These programs can work well for consumers, but they do require you to pay all of your debts in full, plus any fees charged by the company that facilitates the program.
4. Debt consolidation
Also note that you can consolidate debt with the help of a third-party debt relief company or even on your own. Debt consolidation works best when your credit is good enough to qualify for a debt consolidation loan with a lower interest rate than you’re paying now. As with all debt relief options, make sure to check for fees when you compare debt consolidation loans and products.
How to verify a debt relief company is legitimate
Be sure to learn about debt relief programs before you select one. As you choose among debt relief options, consider these steps:
- Reach out to a credit counseling agency: Credit counseling agencies are typically nonprofit firms that can offer a professional overview of your credit and potential options. While credit counseling agencies may not offer debt settlement plans, many offer free consultations where they can spell out all your options for you.
- Ask about fees up front: According to the Federal Trade Commission (FTC), some debt relief organizations charge high fees that they try to hide. Make sure you have a full understanding of any fees you’ll be charged for debt relief now and later on.
- Do some research: The FTC also notes that you should dig into the backgrounds of companies you’re considering before you move forward. For example, you should contact your state attorney general and a local consumer protection agency before selecting a company to work with.
The bottom line
Reaching out for help to settle your debts isn’t always easy, but it’s often the only option for consumers who can’t seem to change their circumstances otherwise. If you find yourself in this position, the best thing you can do is spend some time carefully comparing your options.
The best debt relief companies can take on most of the grunt work for you, but remember that it’s your credit and your money that are at stake.
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