Debt management offers a way to eliminate unsecured debt without needing a loan or putting assets like your home or car at risk. These programs are especially effective for tackling credit card debt, but they can also cover other types of unsecured debt.
The key advantage of debt management programs is their ability to reduce the interest rates on high-interest debts, like credit cards, and lower your monthly payments.
Most debt management programs are run by credit counseling agencies, which often slash interest rates from 20%-30% down to around 8%, sometimes even lower. This makes monthly payments more manageable and can help you pay off your debt within 3-5 years if you stay committed.
So, how do you find a reputable debt management program? We’ve gathered the top debt management companies in this article, and one of them could be the perfect fit for your needs.
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7 Best Debt Management Companies
- Freedom Debt Relief – Best Overall for Debt Management
- National Debt Relief – Best for Fee Transparency
- Pacific Debt Relief – Best for an Established Track Record
- Accredited Debt Relief – Best for Quick Resolution
- Money Management International – Best Nonprofit for Debt Management Help
- CuraDebt – Best for Tax Debt management
- New Era Debt Solutions – Best for After-Hours Customer Service
Freedom Debt Relief – Best Overall for Debt Management
Freedom Debt Relief is a leading choice when exploring the best debt management options due to its solid track record and comprehensive approach.
With over two decades of experience, the company has successfully resolved billions of dollars in debt, creating personalized settlement plans tailored to each client's unique financial situation.
Freedom Debt Relief is distinguished by its commitment to transparency, excellent customer support, and offering holistic financial solutions. With no upfront fees and flexible payment plans, Freedom Debt Relief is a reliable and effective option for those seeking to regain control over their finances.
The company focuses on helping with unsecured debts, such as credit cards, personal loans, and medical bills. It negotiates with creditors to reduce the amount you owe and guide you toward becoming debt-free.
Typically, clients with at least $7,500 in debt can resolve it within two to five years. Freedom Debt Relief charges 15% to 25% of the enrolled debt, with no fees paid upfront—you only pay after a settlement is reached and agreed upon.
Pros
- No upfront fees required
- Over $15 billion in debt successfully settled
- Interactive client dashboard to track settlement progress
Cons
- Services not available in all states
- Potential significant negative impact on credit scores
- The settlement process may take up to 48 months
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National Debt Relief – Best for Fee Transparency
National Debt Relief is one of the leading debt relief companies, having been established in 2009. Since then, it has assisted over 550,000 clients in resolving unsecured debts through its debt settlement services.
Clients can save up to 46% on their debt (before fees) and achieve debt freedom within 24 to 48 months.
Additionally, National Debt Relief boasts an extensive network of partners who offer referrals for debt relief options such as debt consolidation loans, credit counseling services, and bankruptcy assistance.
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Pacific Debt Relief – Best for an Established Track Record
Pacific Debt Relief is a dependable choice for debt management, known for its personalized strategies in helping clients reduce unsecured debt. With over 20 years of experience, they provide tailored debt settlement programs that aim to significantly cut down what you owe, often through direct negotiations with creditors.
Their commitment to transparency and strong client support offers a clear and manageable path to becoming debt-free, typically within 24 to 48 months.
Accredited by the American Fair Credit Council, Pacific Debt Relief has built a solid reputation for assisting clients in achieving financial stability without charging any upfront fees, making it a trustworthy option for effective debt relief.
Pacific Debt Relief has also integrated new technology to streamline client and team communication, improving case management efficiency.
Their team regularly receives training on the latest best practices and negotiation techniques. With Pacific Debt Relief, you won’t pay any upfront fees. The fees, which range from 15% to 25%, vary based on your location and the amount of debt involved.
Pros
- No upfront fees required
- A+ rating from the Better Business Bureau
- Regular updates every few weeks from your account manager
Cons
- Services not available in all states
- Possible negative impact on credit score during the program
- A minimum of $10,000 in unsecured debt is required to qualify
Accredited Debt Relief – Best for Quick Resolution
Accredited Debt Relief operates as a DBA of Beyond Finance, a debt consolidation firm in business since 2011. The company claims to have helped over 200,000 clients and resolved over $1 billion in debt.
Accredited Debt Relief specializes in unsecured debt, such as credit cards, medical bills, and payday loans. It offers debt settlement services and debt consolidation through its affiliate partners.
While there’s no officially stated minimum debt requirement, client reviews suggest that the company typically handles debts exceeding $10,000. The company provides free consultations and savings estimates without upfront fees or enrollment obligations.
Accredited Debt Relief reports that clients who make all their monthly deposits typically reduce their enrolled debt by about 45%, with fees ranging between 15% and 25% of the total amount. Some clients pay off their debts in as little as 12 months, although the usual timeframe is up to 48 months.
Accredited Debt Relief holds accreditations from the American Fair Credit Council (AFCC) and the Consumer Debt Relief Initiative (CDRI). It also has an A+ rating from the Better Business Bureau, with relatively few complaints considering the number of reviews.
On Trustpilot, Accredited Debt Relief is rated 4.9 stars out of five, with 98% of over 5,600 reviewers awarding it four or five stars. Negative reviews commonly mention dissatisfaction with the enrollment process and concerns about how fees are presented.
Pros
- No upfront payment is required
- Over $1 billion in debt successfully settled
- A+ rating from the Better Business Bureau
Cons
- High fees
- Not available in every state
- Risk of lawsuits and collections by creditors
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Money Management International – Best Nonprofit for Debt Management Help
MMI has been in the industry since 1958 and is the largest company of its kind. Their website’s homepage offers many options, making it easy to address your financial challenges and find solutions.
They provide specialized services covering home buying, credit report analysis, and bankruptcy. Additionally, they offer free webinars and online classes. Service is available around the clock, and the website includes a Spanish-language option.
When you enroll in an MMI debt management plan, you’ll be responsible for setup and monthly fees. These fees vary depending on the debt you’re repaying and your location. On average, clients pay about $25 per month and $33 for the setup fee.
One of the standout features of MMI is its fee cap. You’ll never pay more than $75 to set up your debt management plan, and your monthly fees will never exceed $59, regardless of the debt you’re repaying or where you live.
Pros
- Nonprofit organization
- Services available 24/7
- Over $10 billion in debt was successfully repaid
- Average credit score increase of 85 points four years after enrollment
Cons
- Not all creditors may participate in the program
- Temporary decrease in credit score due to closing of credit accounts
- Physical locations aren’t available in every state, though phone support is 24/7
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CuraDebt – Best for Tax Debt Management
CuraDebt is a highly regarded choice for debt management. It offers various services, including debt settlement, tax relief, and debt negotiation.
With over 20 years of experience, CuraDebt has established a strong reputation for helping clients significantly reduce unsecured debt through customized settlement plans, typically resolving debts within 24 to 48 months.
The company is noted for its personalized approach. It works closely with clients to develop solutions tailored to their unique financial needs. CuraDebt's primary appeal lies in its debt settlement services.
Like other debt settlement companies, there are no upfront fees. Instead, you’ll stop paying directly to your creditors and contribute monthly to a third-party account, accumulating settlement funds.
While these accounts may incur fees, CuraDebt doesn’t specify the exact cost. If CuraDebt successfully resolves any of your debts, they will charge a settlement fee ranging from 15% to 25% of the original amount of those debts.
Pros
- Provides live chat support
- Accredited by the AFCC and IAPDA
- Capable of handling various types of debt
Cons
- The website is confusing and outdated
- Services are limited to 26 states and Washington, D.C.
- Settlement fees are calculated based on the initial debt amount, not the settled amount
New Era Debt Solutions – Best for After-Hours Customer Service
New Era Debt Solutions is renowned for its dedication to helping clients achieve debt freedom without upfront fees. With over two decades of experience, New Era takes a straightforward and ethical approach to debt settlement, focusing on reducing unsecured debt through direct negotiations with creditors.
What distinguishes New Era is its commitment to transparency and client satisfaction. It manages the entire process in-house rather than outsourcing. This approach ensures consistent, high-quality service and often results in quicker debt resolution within 24 to 48 months.
Their debt specialists customize the settlement strategy to fit each client's unique financial situation. New Era partners with Consumer First Legal Network, offering extended support and legal insight when needed.
Pros
- Offers personalized debt relief programs
- No upfront fees are required for services
- A+ rating from the Better Business Bureau
Cons
- Not available in all states
- Lack of transparency in rate structure
- Likely to cause a decline in credit score
Best Debt Management Companies – Buyer’s Guide
What Is Debt Settlement?
Debt settlement, also known as debt relief or debt resolution, is an agreement between a borrower and a creditor in which the creditor agrees to accept a reduced amount as full payment for the debt.
If you successfully settle a debt, you pay a lump sum that’s less than the total balance, and the creditor forgives the remaining debt. Creditors are more likely to agree to a settlement when a borrower is several months behind on payments. Sometimes, creditors may accept a series of payments to settle the debt.
You can choose to negotiate your debt yourself or hire a debt settlement company. These companies usually charge between 15% and 25% of the debt balance for their services, and you only pay if they successfully negotiate a settlement that you agree to.
Professional assistance can be helpful if you’re inexperienced with negotiations, uncomfortable handling it yourself, or if you have multiple accounts to resolve. Debt settlement applies only to unsecured debts like personal loans, credit card balances, medical bills, collection accounts, and sometimes private student loans.
It doesn’t work for secured debts, as lenders can simply seize the collateral if the loan isn’t repaid. It’s important to understand that creditors aren’t required to settle with you, and during the settlement process, you can expect collection efforts to continue, including phone calls, notices, and even potential lawsuits from creditors.
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How Does Debt Settlement Work?
Here’s what to expect when you enroll in a debt settlement program:
- You’ll need to gather a lump sum to offer your creditors. If you can’t pull it from savings or borrow it, you’ll stop paying some of your debts and instead funnel that money into a debt settlement savings account. Typically, it takes about four to six months to settle your first account and two to four years to settle multiple debts.
- You’ll likely hear from creditors and debt collectors. Once you stop making payments, expect to receive calls, notices, and other communications from creditors and collectors. In some cases, they might even file a lawsuit, especially if you ignore their attempts to reach you. The debt settlement company may offer guidance on handling these calls.
- When you’ve saved enough money to make an offer, your debt relief company will contact your creditors. Your debt settlement professional will work to negotiate a settlement agreeable to you and the creditor.
- If a settlement is reached, your debt settlement professional will present the offer to you. You have the choice to accept or decline it. By law, you only pay the debt settlement fees if you agree to the offer and make the payment. You’ll then pay the creditor the agreed-upon lump sum and cover the debt settlement company’s fee.
- Your account will likely be closed. The creditor will usually report the account to credit bureaus as "settled for less than the amount owed," and any remaining balance will be forgiven.
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Who Qualifies for Debt Settlement?
Debt settlement may be appropriate if you.
- Have an unmanageable amount of unsecured debt.
- Don’t want to file for bankruptcy or don't qualify for a Chapter 7 bankruptcy.
- Can show a hardship or reason for creditors to settle with you.
- Creditors might be willing to settle for less than the full amount you owe if the alternative is getting no money at all or taking costly legal action. If you just want to reduce your payments, then debt settlement is probably not for you.
- "Debt settlement is an option for consumers who can't afford their current debt payments and either can't or won't file for bankruptcy," says Gerri Detweiler, credit expert and co-author of "Debt Collection Answers: How to Use Debt Collection Laws to Protect Your Rights."
What Are the Pros and Cons of Debt Settlement?
Pros
- You may reduce what you owe
- Collection calls stop after you settle your account
- Debt settlement is private, unlike bankruptcy, which is public and takes place in the court system
- You can choose to accept or decline a settlement offer. With bankruptcy, a judge tells you what you'll pay or which property you'll surrender
Cons
- Your forgiven debt may be taxable
- You may not settle some debts
- You will pay a fee to the debt relief company when an account is settled
- Missed payments will accumulate late fees, penalties, and other charges that could make settlements less valuable
How to Choose the Best Debt Settlement Company
When choosing a debt settlement company, focus on five key areas:
- Eligibility: Make sure the company can settle the type and the amount of debt you have. Many companies will only settle specific types of debt, such as credit cards or medical bills. Most companies require you to enroll in a minimum amount of debt.
- Fees: Look for a debt settlement company that charges the lowest fee percentage. Consider savings account and other fees as well.
- Accreditation: Verify that a company is accredited by the American Fair Credit Council, the International Association of Professional Debt Arbitrators or, ideally, both. These groups require members to meet certain standards designed to help consumers.
- Transparency: Debt settlement can't protect you from debt collectors, lawsuits or hits to your credit score, and a good debt relief company will be transparent about these facts. Check the company's website for disclosures about the effects of settlement on your credit score.
- Customer Service: For reviews and complaints, check the Better Business Bureau and the Consumer Financial Protection Bureau's Consumer Complaint Database.
What Are the Alternatives to Debt Settlement?
- Debt management plans: A DMP consolidates your debts into one monthly payment and establishes a plan to pay them off in three to five years. A credit counseling agency creates and manages your plan, and a counselor may negotiate lower interest rates and get certain fees waived. You make a monthly payment into the plan, and your credit counselor distributes it among your creditors. Your payment also includes a debt management fee.
- Debt consolidation loans: A debt consolidation loan replaces multiple accounts with one loan and payment. Ideally, The new loan features a lower interest rate, monthly payment, or both.
- Balance transfer credit card: It allow you to move debt from one or more credit cards to a new one. Cards for people with good credit offer a 0% APR on transferred balances for 12 to 21 months. Expect to pay a balance transfer fee; 3% to 5% is typical.
- Bankruptcy: Filing bankruptcy stops collection efforts. Bankruptcy occurs in court, and you and your creditors must abide by a judge's decision.
- Direct negotiation: You can negotiate with your creditors yourself if you want to avoid working with a debt settlement company. "There's nothing a debt settlement company can do for you that you can't do for yourself," says credit expert John Ulzheimer, formerly of FICO and Equifax. "If you're having difficulty making your payments, talk to your lender. They'd rather work with you than with a third-party settlement company."
Best Debt Management Companies – FAQs
What Is the Difference Between Debt Settlement and Debt Consolidation?
When you settle a debt, you pay less than what you owe after pausing payments to your creditors and saving up for a lump-sum payment. Debt consolidation involves merging multiple debts into a single loan, enabling you to make one monthly payment, usually at a lower interest rate. To qualify for a debt consolidation loan, you typically need at least a fair or good credit score.
How Does Debt Settlement Affect Your Credit Score?
Any debt settlement agreement that requires you to stop paying creditors will negatively impact your credit score. This is because your payment history is the most significant factor in determining your score.
Credit utilization, the second most important factor, is also affected when accounts are closed during the debt settlement process. "You can't have it both ways: You can't settle debts for less than what you owe and expect no damage to your credit," says Detweiler.
You’ll need to choose between protecting your credit and getting out of debt, and sometimes, prioritizing debt relief is the more crucial short-term goal.
"Settlements are seen as major derogatories in both FICO and VantageScore systems," explains Ulzheimer. "As a result, they can certainly lead to lower credit scores."
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Are Debt Settlement Companies Legitimate?
Yes, debt settlement companies can be legitimate, but some may be misleading or fail to fulfill their promises. The FTC advises steering clear of companies that:
- Charge fees before settling your debts, which the agency prohibits
- Claim they can eliminate all of your unsecured debts
- Promote a "new government program" for personal credit card debt, which is a scam
- Instruct you to stop communicating with your creditors without explaining the consequences
- Promise they can stop all debt collection calls and lawsuits
- "Be cautious of debt settlement companies that make the process seem guaranteed or charge high upfront fees," says Detweiler. "There's no assurance that every creditor will settle, and a reputable debt settlement company should give you realistic expectations based on your specific creditors."
Bottom Line – Best Debt Management Companies
Selecting the right debt management company is key to taking control of your financial future. Companies like Freedom Debt Relief, Pacific Debt Relief, and CuraDebt each bring their own strengths, whether it’s personalized debt settlement plans, comprehensive financial education, or transparent, ethical practices.
When choosing a debt management service, it’s important to consider your specific needs, the company’s reputation, and the flexibility of its services. With the right partner, you can significantly reduce your debt, restore your financial stability, and embark on the path to lasting financial freedom.
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