A debt settlement company typically contacts lenders or creditors on your behalf and works to negotiate a lower payoff amount for unsecured debt such as credit cards. Typically, you’ll make deposits to a savings account that the debt settlement firm will use to pay off your debts. You’ll also need to stop using the credit card or line of credit that the debt-reduction program is targeting.

Here are some of the best debt settlement companies and things to keep in mind before signing on for a debt resolution program.

What are debt settlement companies?

The primary purpose of debt settlement companies is to negotiate on your behalf with creditors or lenders. The goal is to settle your enrolled debts for a lower amount than your enrolled account balances. Debt settlement could be an attractive option if you are struggling to make payments, and debt settlement companies can often help customers work down their debt.

Seeking the help of a debt settlement company should be considered carefully, however, and often only after exhausting other options. While there are benefits to using this approach, there are also plenty of risks and drawbacks.

Debt settlement versus debt consolidation

Both debt settlement and debt consolidation are ways to reduce the overall cost of your debt, but the processes differ in some key ways. Debt consolidation involves reducing the number of creditors you owe by combining all debt under one loan. This means that instead of paying several interest rates on various debts, you only have one monthly payment to worry about. You are still, however, responsible for the principal debt balances.

Debt settlement involves reducing the total debt you owe by negotiating with individual creditors. This means that you are still responsible for paying each individual lender, but you have a company negotiating on your behalf to reduce the cost of each debt.

Working with a debt settlement company comes with inherent risks. There is no guarantee that your creditors will negotiate with a debt settlement company, and debt settlement can significantly impact your credit score. While the companies listed below are reputable, you should look up customer reviews and complaints, as well as explore alternative options before working with a debt settlement company.

Best debt settlement companies of 2022

Accredited Debt Relief

In business for more than a decade, Accredited Debt Relief has received top marks from various industry and consumer organizations. It has been accredited by the American Fair Credit Council. In addition, Accredited Debt Relief has earned excellent ratings on customer review sites such as Trustpilot and Best Company.

The company handles only unsecured debts such as credit cards, department store cards and medical bills. Its programs range from 12 to 48 months.

Accredited Debt Relief offers a money-back guarantee. Customers are able to cancel their debt resolution program at any time without penalties or obligations and will receive a refund of any money that was invested toward a potential settlement, minus fees. Accredited Debt Relief customers also have the opportunity to approve all settlements negotiated on their behalf.

Bankrate score: 4.8/5

National Debt Relief

While many debt settlement companies do not reveal a great deal of information on their websites about fees or program details, National Debt Relief provides an admirable level of transparency.

The company, which settles debts on credit cards, department store cards, personal loans and medical bills, notes that consumers must have at least $7,500 in unsecured debt. The company says the average client typically pays a fee of 15 to 25 percent of total debt enrolled once your debt is settled by National Debt Relief.

All of National Debt Relief’s debt arbitrators have been accredited through the International Association of Professional Debt Arbitrators (IAPDA). In addition, National Debt Relief, which has been in business since 2008, is a member of the American Fair Credit Council. That means it goes through regular audits to ensure the quality of its services.

Bankrate score: 4.7/5

New Era Debt Solutions

In business since 1999, New Era Debt Solutions has settled more than $250 million in debt for clients. It also holds numerous industry accreditations including from the American Fair Credit Council and Better Business Bureau.

New Era provides customers with personal debt counselors and an in-house team that will be your contacts for the life of your service contract.

There are no upfront fees with New Era Debt Solutions, and the company has a track record of settling accounts for an average of 42.87 percent of the account balance at the time of settlement. Some initial settlements can occur within just 90 days or sooner. Cases, on average, are completed in just 27.7 months.

The company handles unsecured debts such as credit cards, department store cards, signature loans and private student loans in default.

Bankrate score: 4.5/5

Pacific Debt Inc.

Pacific Debt has settled more than $250 million in debt during its 18 years in business. The company is also an accredited member of the American Fair Credit Council.

The company prides itself on the level of service offered to clients throughout the process. This begins with enrollment, during which an adviser works with prospective clients to determine if debt settlement is a good choice. Advisers will review your accounts and even help complete a detailed budget to ensure the program will be affordable. Once debt settlement negotiations are underway, customers are assigned a personal account manager.

Pacific Debt typically resolves cases in 24 to 48 months. It will negotiate debts associated with credit cards, personal loans, payday loans, medical bills and balances on repossessed vehicles. Typically, a minimum debt balance of $10,000 is required.

Bankrate score: 4.4/5

How does the debt settlement process work?

The goal of the process is to have creditors, such as credit card companies, forgive a substantial portion of what you owe. Some debt settlement companies have successfully reduced unsecured debts by 40 to 60 percent.

While negotiations are taking place on your behalf, the consumer is typically asked to cease making any monthly payments on their unsecured debts. This means that you must default on your loan payments to work with a debt settlement company. The company you’re working with is then able to use this as leverage for negotiations. Creditors would rather be paid a portion of the debt owed than nothing at all.

While negotiations are taking place, you will typically be asked to begin making deposits into an account and the funds accumulated in the account will be used to pay whatever settlements are ultimately agreed upon.

Pros and cons of debt settlement companies


  • The ability to reduce your total debt
  • Provides an alternative to bankruptcy
  • It is easier to have a company negotiate on your behalf than to try to do it yourself


  • Initial damage to credit score
  • It will stay on your credit report for 5 to 7 years, impacting your ability to borrow money in the future
  • Risk of being sued by creditors
  • No guarantee the debt settlement company will be able to negotiate your debt

What to look for in a debt settlement company

Selecting a reputable debt settlement company requires research and careful decision-making. You’ll want to consider several factors about each company before making any decisions:

  • Length of time in business: The key to debt settlement is its track record and how effective it is in its negotiations. A company that has been in business for a long time shows more of a history of working with creditors and achieving settlements.
  • Availability of customer service representatives and up-front communication: A truly reputable debt settlement company’s customer service representatives are ready, willing and able to answer questions about the debt settlement process and all fees. Steer clear of companies that only provide vague or unclear answers. It can take two to five years to settle debts, so finding a company that’s supportive and is easy to get in touch with will make the process much less stressful.
  • History of satisfied clients: Checking customer reviews can provide valuable insight about the quality of service a company has provided others.
  • Fees: You’ll also want to find out exactly what fees a debt settlement company charges for services. You don’t want to be locked into a contract that you can’t afford. It’s also a good idea to avoid companies that charge fees in advance. Reputable companies will not charge fees before doing any work for you.
  • Trained personnel: An upstanding debt settlement company should have debt consultants who are trained and certified in debt settlement.
  • Industry accreditation: The American Fair Credit Council (AFCC) is a key debt settlement industry association. Look for a company’s association with the AFCC. Companies can only join if they are in full compliance with the Federal Trade Commission and follow a strict code of conduct. The International Association of Professional Debt Arbitrators is another professional industry association that offers accreditation to debt settlement companies.

Alternatives to debt settlement

If you are struggling with overwhelming debt, debt settlement is not your only option. Alternatives to debt settlement include the following:

  • Do-it-yourself debt settlement: While working with a debt settlement company makes it much easier, it is possible to reach out to your creditors and negotiate on your own.
  • Debt management plan: You can work with a credit counseling agency to establish a debt management plan. This involves depositing a set amount of money into a separate bank account each month. The credit counseling agency will then distribute these funds to creditors each month while also trying to negotiate a lower interest rate for you.
  • Debt consolidation: You can consolidate your debt with the help of a debt relief company or by working directly with a lender that offers debt consolidation loans. Debt consolidation is the act of combining your previous debt into one new loan that has a lower interest rate.

The bottom line

The key point to remember when considering debt settlement is that taking such an approach to addressing financial challenges is a significant decision, one that will have long-lasting ramifications.

It’s critical to weigh your decision carefully. It is a good idea to speak with a financial counselor or coach so that they can help you figure out what the best option is for you. If you do decide to go with a debt settlement company, make sure that you know exactly what fees the company will charge and are aware of the risks.


To select the top debt settlement companies, Bankrate considered several factors including services offered, affordability, customer experience, customer satisfaction and the stability and reputation of each company. We sought to find the companies with the highest levels of transparency and customer satisfaction. Each company has received a Bankrate rating, based on the following factors:

Services offered: The minimum debt required, types of eligible debt and whether the company offers free credit counseling

Affordability: Fees charged and money-back guarantee terms

Customer experience: Website usability, customer support options and hours, and app availability

Customer satisfaction and company reputation: Unresolved complaints with the FTC or CFPB

Company stability: The amount of time the company has been in business and whether it is accredited by a professional trade association