Debt Relief Blog and Resources

E.E. Cummings once said, "I'm living so far beyond my income that we may almost be said to be living apart." When you are living beyond your means, your debt can easily take on a life of its own. Debt is an increasingly common part of life for many Americans. According to a study performed by the PEW Charitable Trusts, 8 in 10 Americans have debt (most commonly mortgages), and 7 in 10 say that debt is a "necessity in their lives."Debt can leave you feeling both overwhelmed and enslaved, especially since the average debt for a balance-carrying household is $16,048. There are many strategies and options for managing and paying off your debt. Depending on the severity of your debt, this can be an intimidating and discouraging process. Many companies offer debt consolidation and debt settlement services to help you manage your debt. While both services help manage debt, there are some important and distinct differences. What Is Debt Consolidation? Debt consolidation is the process of combining all your debt into one simple payment. It usually involves taking out a new personal loan or working with a respectable credit counseling agency. You still pay off all your debt, though usually under more favorable terms. Applicants who achieve lower interest rates may be able to pay off their debt more rapidly.Debt consolidation, if used properly, can help your credit score long term, if you pay off your debt consolidation loan in a timely manner. However, if you miss payments or close all of your accounts immediately after paying off your debt, your score could be negatively impacted. Is It Right for You? Debt consolidation is a great option if you have high-interest rates on your current debt. This is especially applicable to credit card debt. The average credit card APR in March 2017 was 15.59 percent. Companies such as Consolidated Credit offer an average APR of 6 to 10 percent.It may also be a good fit if you have high monthly payments. Debt consolidation allows you to achiever better repayment terms. A lower monthly payment makes it easier to stay on top of your debt and prevents you from accruing late payment penalties.Debt consolidation is usually best for individuals with good credit scores. A good credit score will allow you to receive the best possible interest rate if you take out a debt consolidation loan. A poor credit score may not provide more favorable terms than your current credit plan. Additionally, debt consolidation tends to have a less significant impact on your credit score than debt settlement. This is true with both consolidation loans and working with a credit counseling agency.Finally, debt consolidation is a great option if you have an abundance of monthly bills. Debt consolidation provides the ease of one monthly payment to one creditor. If you only have one creditor, then you may want to consider other options such as a debt management plan or debt settlement. What Is Debt Settlement? During debt settlement, a company negotiates with your creditors to settle your debt for less than the original amount. Typically you will pay money into an account and that account will be used to pay your creditors. Often you are encouraged to fund the account, rather than pay off your balance. The company will then use this money and your lack of payments to convince your creditor to settle your debt.Because you are paying less than the amount owed, there are usually more significant ramifications with debt settlement than debt consolidation. For example, your credit score and report are negatively impacted. According to the NFCC, your credit score could decrease by 65 to 125 points. After settlement, your debt is often marked as "Settled" or "Paid Settled" rather than "Paid in Full." This will show on your credit report for seven years. In addition, debt settlement has varying results. You can search for reputable companies who are ranked highly on sites such as BestCompany.com. Is It Right for You? If you cannot manage your debt through other alternatives, such as debt management programs or debt consolidation, debt settlement may be a good option. Top companies such as Pacific Debt Inc. recognize that debt settlement is not right for every circumstance. As a result, many debt settlement companies require a minimum debt amount, often over $7,500 or $10,000. If you have a smaller amount of debt, you may want to consider other options.Debt settlement allows you to pay off your debt through one monthly payment. According to Freedom Debt Relief, it also allows you to pay off your debt faster than making minimum payments.If you have a low credit score, debt settlement may be a good option. A low credit score may disqualify you from lower interest rate options. Debt settlement is also ideal if you are considering bankruptcy and have no means to pay off all of your debt. According to National Debt Relief, debt settlement programs tend to lower your credit score significantly less than bankruptcy, typically by half as many points. After debt settlement, with wise choices, you can rebuild your credit score. Choose the Option that Meets Your Needs There are many options for debt management. Remember to consider factors such as your credit score, the total amount of debt, and your present interest rates. Assess your individual circumstances to see if debt settlement or debt consolidation is right for you.  

You need to raise your credit score. Here's how: Piggybacking, error disputing, and credit utilization tracking are just a few of the great tips we have for you today. Once you've finished this article, you'll understand why your credit report is so important, the role debt plays in determining your credit report, and some expert opinions on how to get it back up. If your credit took a dip, debt likely played a part. Some people go to debt settlement companies to negotiate a lower debt payment with creditors and lenders. Others successfully find ways to dig themselves out of debt. Either way, your credit score is suffering from the experience.  Allow us to break things down for you. Understanding Your Credit Score Before beginning the long trek to a better credit score, you need to understand what a credit score is and exactly why a good credit score is needed. Try taking our credit score IQ test to see how much you already know: What Is a Credit Score? Your credit score — often called your FICO score — is a three-digit number ranging from 300 to 850 that measures your credit habits. This includes how much you spend, how quickly you pay it back, how many late payments you've had, what percentage of your credit maximum you've used, and so on.   The higher the number, the better your credit report is. Typically, a score above 720 is considered a good credit score, but if you're below 600, you're in trouble.   For many reasons, your credit score seems to be closely related to your income level. In fact, Value Penguin reported low-income households had an average credit score of 664.     Your credit report is important because it tells prospective lenders, employers, landlords, and others how responsible you are with your credit. If you have a bad credit score, you might not qualify for a loan you want because a banker wouldn't see you as responsible enough to pay it back effectively.   A landlord might also turn down your application for an apartment because he/she might have reservations on whether or not you can keep up with rent. Believe it or not, employers sometimes look at credit scores as well to see how financially responsible a potential employee is. Obviously, learning responsible credit habits isn't just important, it's a necessity.   Rebuilding Your Credit Score According to Sarah Davis from Money Under 30, if you have bad credit "you could end up paying over $200,000 more [than someone with good credit] in unnecessary interest just because of bad credit." Seen in this new light, bad credit and debt essentially become the same thing. Debt gives you bad credit and bad credit gives you even more debt. It's a hole that needs to be filled. Here are the best methods for rebuilding your credit score: The Piggybacking Method According to Matthew Pillmore, President of VIP Financial Education, you can begin piggybacking off of a friend or family member’s credit card account to get your credit score up to 700+ in as little as 45 days.   This is a credit building method that FICO has threatened to remove from its factoring of credit scores, but it still works. The piggybacking method allows those with low credit to become an authorized user (AU) and adopt the entire credit history of the said account.   But, does your negative credit affect the credit score of the primary account holder? No, only good credit history is "adopted" to either person’s credit history. Make sure you become an authorized user in such cases (don’t use co-signing, as it is much riskier for both parties). The best accounts to be added to will meet the following criteria: Must be accounts that report (if the creditor doesn’t require the authorized user to provide an SSN, it can’t report on your credit report. Otherwise, you should ask the creditors or lenders ‘am I liable for this account?’) Make sure the account has a long history (over 5 years). You want to add substantial history to your account so that it has a large and highly positive impact on your credit score. The account has a large credit limit (at least $5000). Balance must be low and has to have been paid on time every month. Be very careful — obviously, you should only add accounts that are going to positively contribute. The recommendation is that you should use the piggybacking method, not to boost your credit score, but to get it to a place where you can start building your own positive credit history.   Remember, the goal when using the piggybacking method isn’t to get financing quite yet. Instead, the piggybacking method should be the first step you take to building your credit score.   Examine Your Credit Report and Dispute Mistakes Since the information that counts most is that which the credit bureaus have, you should contact AnnualCreditReport.com to get your yearly free credit score or a credit report from each one. Make sure to get your full credit report from all three credit bureaus, TransUnion, Equifax, and Experian. Examine your credit report meticulously.   You are looking for errors pertaining to: Your identity (name, phone number, or address) Incorrect account status (closed accounts are open, report states you are the owner of the account instead of AU, incorrect report of delinquent status, same debt listed multiple times, etc.). Balance errors (incorrect credit limit or current balance). Focus On High-Interest Debt The first step when you find an injured person is to stop the bleeding — the same is true of stopping a declining credit score. You have to find the source of the damage and immediately stop the loss of credit. This means you need to tackle your debts head on. Putting extra money toward high-interest debts is a popular debt and credit management strategy. It is more commonly referred to as the debt avalanche method. The advantage of this method is that it lowers your debt-to-income ratio, an important factor in determining your credit score. Additionally, you can try to identify accounts in which you are nearing your credit limit. Staying well below your credit limit will help you maintain and build a healthy credit score. How Does Divorce Affect Your Credit Score? Divorce is a nasty business and it has been used in the past to harm an ex's credit score. It's important to know that it isn't the actual divorce itself that often hurts a person's credit score, it is the negative circumstances that divorce causes. And divorce doesn't necessarily have to hurt your credit report; it is possible to make a clean break.   If a couple has a joint account before the divorce, they are still jointly responsible for the account after divorce. Judges have been known to assign one spouse the financial responsibility for such accounts. In some sad cases, the spouse responsible for paying the account will purposefully neglect to pay fees in order to hurt their ex's credit score out of spite. How Does Debt Settlement Affect Your Credit Score? There's no sugarcoating it: working with a debt settlement company can do some serious damage to your credit score. Some experts say that applying for debt settlement is almost as bad for your credit as declaring bankruptcy.   Asking for a settlement in and of itself won't hurt your score, but once the request is reported, your credit score will more than likely be lowered. For example, in 2009, FICO released two hypothetical scenarios of how debt settlement would affect two consumers' credit scores. One consumer with a score of 680 experienced a loss of 45–65 points. The other consumer with a score of 780 experienced a loss of 140–160 points.   When a debt is settled, creditors or lenders may mark it on your credit report as "Settled" or "Paid Settled." To be truthful, any status other than "Paid as agreed" or "Paid in full" is bad for your credit, but anything is better than "Unpaid." Sometimes a lender will list your debt to the credit bureaus as "Paid" depending on your debt settlement company and your lender, and this won't hurt your credit report as much.   Regardless, it's tough to tell when this will happen.   Remember, if you're already 180 days behind in paying back your credit card, your credit history likely isn't going to get much worse. At that point, debt settlement would be an excellent option.   If you're not even 120 days behind on your credit card payment, proposing to a debt settlement company probably isn't the best idea. Debt settlement should be a last resort. And since that's the case, you shouldn't waste your time going with companies that aren't established and reliable.   Customers should be aware that lenders are under no obligation to settle a debt, so be aware that a debt settlement company that guarantees such negotiation is likely being dishonest. Expert Debt and Credit Repair Advice I asked dozens of debt experts what they considered the best strategies for both getting out of debt and rebuilding your credit score. Here's the best of the best of what they had to say: Credit Utilization - Joe Hogan (LinkedIn), Director of Financial Planning at Mariaca Wealth Credit utilization is a measurement of the usage of your available credit compared to the maximum allowed by the lender. It is calculated by taking the ratio of outstanding credit balances to the overall limits.   High credit utilization negatively impacts one’s credit score. From the lender’s perspective, someone who is taking out a high percentage of the credit offered to them is a higher risk than someone who uses lower amounts. High credit utilization can be an indicator that a borrower is financially overextended and may fall behind on payments. This is so important to lenders that it accounts for 30% of your credit score.   A high credit utilization is typically calculated as over 30%. Lenders evaluate credit utilization on each source, not as an aggregate.   There are a few easy ways to lower credit utilization and increase your credit score. First, you can make payments more frequently to continuously carry a lower balance. If a lender is reporting figures to the credit bureaus a few days before your payment, you may have your highest utilization ratios of the month being reported to the lender. You can also increase your credit limits through your existing lenders to decrease your utilization. Of course, the easiest thing to manage your credit utilization is to use your credit card prudently, only borrowing what you can repay now.   Credit Counseling - Howard Dvorkin, CPA and Chairman of Debt.com For people obsessed with secret hacks, they’re not going to like what I have to say. Your best bet, hands down, is credit counseling. The problem is, few people believe it’s real. I’ve been asked, “How can there be a nonprofit that wants to give me free advice on how to get out of debt? And if it’s free, how good can that advice be?’ But it’s true. Nonprofit credit counseling agencies exist, some for decades. You can call a certified counselor for a free debt analysis. From there, you might be pointed toward a program that costs you a few bucks, but always much less than you’ll save. Or you can say, “No thanks” and just jot down the advice they give you. I never understand people who pay up front for a service they hear once on the radio, but they won’t make a free call to a nonprofit. Debt Avalanche Method - Caleb Backe, CFO of MapleHolistics.com   Because payment history is one of the first considerations of credit bureaus, it’s important to pick a debt strategy that will enable you to make payments on time and positively affect your credit score.   The debt avalanche method of overcoming debt works on the assumption that you are legitimately able to curb spending and increase your earnings. Likewise, this strategy requires any money left over at the end of each month go to minimizing your debts. Unlike the snowball method, debt avalanche has borrowers concentrate on paying down their debts with the highest interest rates first. Even if this debt is not your highest, it’s the most expensive.   Different Debt-Payoff Strategies - Mikel Van Cleve (Twitter), Director of Personal Finance for USAA The impact on one’s credit score can vary from person to person depending on other factors in a person’s credit history. Having said that, there are certain potential impacts on a person’s credit score to consider when evaluating different debt payoff strategies.   DIY payoff methods - Find extra cash flow each month to put toward debt. USAA uses a 3-As approach to help members pay down debt: assess, avoid, and attack. Assess the amount of debt you have and your budget. Avoid adding more debt until things are under control. Put away the credit cards and put some money into savings so you won’t need the credit cards when life throws you a curveball. Attack by putting together a debt payoff strategy and sticking to it. USAA offers its member a free Debt Manager tool to create a plan and track progress. Following this approach could help improve an individual’s credit by lowering the amount of debt you owe. Amounts owed or utilization is the 2nd largest factor in the FICO® credit scoring models.   Balance Transfer – You could consider transferring credit balances to a card with a lower balance. There are fees and interest rate terms to consider with this approach. There’s also the risk of transferring the balance to another card and then charging up the old card again. This would negatively impact one’s credit. You may need to apply for a new card to do the balance transfer, which could have some impact on the credit score due to the inquiry. Additionally, if you close the old card and the new card has a lower credit limit, you could increase your utilization and lower your score.   Consolidation loan – Like a balance transfer, be sure to understand the fees, interest rates, and terms. Also note that while a consolidation loan may make the payments more manageable, it could be the result of paying over a longer time period which could cost you more in interest. Applying for a new loan or closing the old credit account(s) would have the same impact as mentioned under balance transfers.   Debt Consolidation and Forbearance - Jennifer McDermott (Twitter), Consumer Advocate for Finder.com   Debt consolidation – Consolidating debt by taking out a larger one or transferring the one credit card can help people pay off debt faster as it can be easier to manage in one rather than multiple places. It may also see you benefit from a lower interest rate which will mean you pay less in the long run. If you are closing accounts you have had for some time this can negatively impact your credit score as it will lower your credit age. However, it may have a positive impact if you are using a credit card with a higher limit, lowering your credit utilization rate. Deciding on this method really comes down to the terms and conditions of the consolidation method being a better fit.   Forbearance programs – If falling on hard times is making it challenging for you to repay your debt, you may be eligible for forbearance. This is when a creditor gives you a grace period in which you can pay a smaller amount for a temporary amount of time. The credit card debt still needs to be paid back in full, but you have some of the pressure taken off while you get back on your feet. This should make it easier to make your monthly minimums, which means your credit score won’t be impacted by missed payments.   Refinancing - Dock Treece, Staff Writer at FitSmallBusiness.com   To my knowledge, just about any debt negotiation strategy has some kind of negative impact on a debtor’s credit. Bankruptcy hurts your credit, as do debt settlements. Debt forgiveness often has a short-term negative impact, as it’s almost always part of a larger debt settlement. Even refinancing requires hard credit checks, lowers the age of your credit, and raises your utilization – all things that can hurt your credit score.   If you’re looking to negotiate debts, overall the best thing you can typically do is try to refinance. Try consolidating debts and rolling everything into a term loan with a set payment schedule that you’ll have no trouble meeting. Most importantly, quit adding to your balance. These steps, taken together, will minimize the negative impacts on your credit and allow you time to rebuild your score. Debt Is Temporary Remember, if your credit score is suffering, it doesn't have to be like that forever. With patience, you can raise it by practicing some basic habits: Don't buy anything you can't afford immediately Always make credit card payments before the due date comes Don't make expenses surpassing one-third of your credit card maximum If your credit report has been dinged and you still have debt, you should seriously consider getting your debt under control before focusing on rebuilding your credit score (in most cases, the two go hand-in-hand).   If you find yourself over your head and debt settlement is the only option, there are reputable companies waiting for you. Best Company has rated nearly 50 debt settlement companies operating in all 50 states. Companies such as Freedom Debt Relief and Pacific Debt Inc. currently rate the highest in terms of customer satisfaction, operation fees, and accreditations.   It can be hard to have a temporarily bad credit score, but it's not as bad as having a substantial amount of unpaid debt hanging over you.

Where there are people in crisis, there will always be other people looking to take advantage—and the debt settlement industry is no exception. Unfortunately, it only take a few rotten apples to make the entire debt settlement industry as a whole look shady and foreboding, which poses a major problem to legitimate companies out there to help those in need. There is a short list of things to look for when a scam artist is posing as a legitimate debt consolidation company. Here are the things you should look for. Tall Upfront Fees The biggest indicator you're being scammed is the upfront fees. Scammers will try to get you to pay large sums upfront, claiming that it's for legal expenses or something of the like. Don't believe this. A lot of scammers will try to take as much money as they can upfront, then split before they pop up a few months later under a new name, address, and phone number. Lofty Promises or Guarantees A good rule of thumb is that if it sounds too good to be true, it probably is. A lot of scammers will try to lure you in claiming that they have access to a special government program or have a special/secret method to completely eliminate your debt. Occasionally, they'll claim to reduce your debt by some substantial number, such as 70 or 80 percent. Don't believe this. If the company is touting itself as a company that can promise you the moon, they definitely have something fishy going on. Move along. Pushy Reps and Scare Tactics If your debt settlement company has all the shrewd pushiness of a used car salesman, you'll want to turn away. They'll likely use words along the lines of "quick" and "painless," or they may also try to scare or intimidate you into thinking that if you don't sign now, you'll miss out on something. Don't believe this. The truth is, paying off debt is long and painful. There's no way around it. A proper debt settlement company will have professionals helping you through the arduous process of repairing your credit, but don't expect to crack open a cold one and relax in your chair while it happens. Real professionals won't try to scare you into signing with them; they'll help make you aware of your reality, and give you the cance to make an informed decision first. Jamming Communication One of the biggest red flags of all is if the debt settlement company tells you to stop paying your bills and sever communications with your creditors for whatever reason. Don't believe this. A legitimate debt settlement company will never tell you to do these things. No Accreditations There are actually organizations in the financial industry that serve as watchdogs over debt help companies. It's true! If a company has accreditations from one or more of these organizations, you can feel confident that they're more than likely legitimate. AFCC (American Fair Credit Council) BBB (Better Business Bureau) IAPDA (International Association of Professional Debt Arbitrators) Keep in mind that you shouldn't just believe the scammer if they say they're accredited with these organizations. It would be wise to visit these organizations' websites and look to see if the company's name is listed in their registry. If it is, that indicates a big thumbs up that the company is legitimate. Where Do I Go? Believe this: not only are there plenty of legitimate debt settlement providers out there, but there there are also a few trusty resources, like BestCompany.com, which ranks and reviews companies from best to worst. Currently, the top ranked companies in the debt settlement industry are Freedom Debt Relief and Pacific Debt Inc.

There's no way around it—the debt consolidation industry can be downright shady. Plenty of reputable companies out there that stand at the ready to help customers in crisis, but for every good company, there are plenty of rotten ones. So how can you tell who's legit and who isn't? It comes down to accreditations. A few key accreditations we'll look at are the National Foundation for Credit Counseling, the Financial Counseling Association of America, and the National Association of Certified Credit Counselors. National Foundation for Credit Counseling The NFCC was founded in 1951, which makes it the nation's largest and longest-serving nonprofit financial counseling organization. Members of the NFCC are experts in a variety of fields, including the following: Credit/Debt Counseling Bankruptcy Counseling Housing and Mortgage Counseling Reverse Mortgage Counseling Foreclosure Prevention Counseling First-Time Home Buyer Counseling Student Loan Debt Counseling Debt Management Plans Credit Report Reviews Financial Education Debt Management Plans (DMP) are one of the services that NFCC specializes in. A DMP is essentially the same thing as a debt consolidation plan. It involves paying off debts to creditors over a length of three to five years and eliminating the debt which you already have. Your NFCC representative will help you devise a payment plan that will best fit your budget and will get you out of debt as quickly as possible. Every member of the NFCC is accredited by the Council on Accreditation (COA), which mediates the efficiency of a nonprofit financial counseling agency. Financial Counseling Association of America The FCAA is all about making sure customers of debt management services receive the highest quality assistance available. The organization also exists to make sure there is an equilibrium among the customer, creditors, and the member agency. That way, everyone is beneficial and successful.The organization does this by providing consumer protection guidelines for its members, which involves oversight measures. The organization does this by providing consumer protection guidelines for its members, which involves oversight measures. The FCAA also represents its members before state and federal legislative bodies, including lobbying for consumer financial education and industry initiatives in the media. Member satisfaction is also measured regularly to measure the needs of its members. National Association of Certified Credit Counselors The mission of the NACCC is as follows: "Enhance the knowledge, skills, and abilities necessary to help clients increase in financial literacy, address negative money behaviors, and implement sound financial management through holistic financial and career counseling." NACCC members are required to continue their own education to become recertified after a two-year period. When a professional does this, it's a good sign that they're staying up-to-date on current financial laws and regulations. The curriculum to become NACCC-certified involves study in financial problem solving, consumer credit, consumer protection legislation, and the causes and solutions of delinquent debt. So members of the NACCC will not only help you plan to get yourself out of debt but will help you identify the behaviors that led you into debt. How Can You Know Who Has These Accreditations? Recently, Best Company has compiled a list of companies that are accredited with some of these organizations. Some of the top companies that include some of these accreditations include Consolidated Credit, DebtWave Credit Counseling, and DebtGuru. See them for yourself, and avoid getting scammed!  

You need to get out of debt, so we've made it easy to find your best options. Debt settlement companies are designed to help those in dire financial situations negotiate or resolve debt with creditors. Once you've read this article, you'll know which debt settlement company is best suited to your unique financial situation. The fact is that there are so many debt settlement companies out there, that it can be difficult to find the perfect one. That's why we've been careful in selecting our top five most qualified debt settlement companies. How We Evaluate Debt Settlement Companies At BestCompany.com, we evaluate debt settlement companies on a set of carefully selected ranking criteria, which includes important qualities like a company's minimum debt requirement, national accreditations, associated account setup fees, and of course, price. For example, companies with a low minimum debt requirement (e.g. $5,000) tend to have higher scores that companies that require upward of $20,000 in minimum debt. Similarly, companies with few account setup fees, or that charge a lower service fee-a percentage of the total debt, paid to the company-below industry averages, also receive high marks. Top companies also provide their services to more states and have been accredited by the American Fair Credit Council (AFCC) and/or the International Association of Professional Debt Arbitrators (IAPDA). Each debt settlement provider is independently reviewed and ranked using the same set of standards, and companies that demonstrate consistent excellence across our ranking criteria earn top marks. To learn more about the specific considerations that go into our debt settlement ranking criteria, check out how we rank.  After thoroughly investigating each debt settlement provider in the industry, we've identified five companies that stand out from the rest: #1 Freedom Debt Relief   Since 2002, Freedom Debt Relief has been at the forefront of regulating the debt settlement industry. In 2010, the company helped establish rules with the FTC that protect consumers from predatory debt-settlement practices. Freedom Debt Relief is also a founding member of the American Fair Credit Council and a Platinum member of the International Association of Professional Debt Arbitrators. In 14 years of business, the company has settled more than $5 billion in consumer debt in approximately 24-48 months per case (though this is not a guarantee). What we like about Freedom Debt Relief We like Freedom Debt Relief's flexible customizable program, which allows clients to set their own repayment terms. Customers can choose both the amount and the frequency of their payments and can rest assured that absolutely no fees will be charged until after the debt settlement services have been rendered in full. We found Freedom Debt Relief's Savings Estimator to be especially useful to customers who might be hesitant to sign up for a free consultation. The Savings Estimator calculates total savings, length of the program, as well as the suggested monthly deposit.   #2 Pacific Debt Inc. Coming in at second place is Pacific Debt Inc., which got its start in 2002 as a response to the growing consumer debt epidemic in America. Pacific Debt is an accredited member of the American Fair Credit Council and the IAPDA and provides a simple enrollment process along with a client care team to help customers navigate the early stages of debt settlement. Each customer is assigned a personal account manager, who provide monthly updates on the customer's progress, as well as negotiates with creditors to speed up the settlement process. What we like about Pacific Debt Inc. One of the reasons we awarded Pacific Debt our number two spot is how easy its enrollment process is. Pacific Debt does not require customers to have a certain credit score before doing business, meaning a wider range of people — even those whose debt problems have severely affected their credit — can apply for debt settlement services with Pacific Debt. We also like Pacific Debt's low service fee of 17-20%. Many debt settlement services charge between 21% and 24%.   #3 SettleBankDebt.com Our third-ranked debt settlement company has impressed customers by offering a unique approach to those seeking financial freedom. Instead of encouraging customers to stop paying their debt in order to negotiate, the company only takes on customers that already have unsecured debt that is in collections or have been declared delinquent; this way, customers do not suffer any more penalties to their credit score than is necessary. SettleBankDebt.com has been in the debt relief business since 1996. But, how much does SettleBankDebt.com cost? The company only charges customers anywhere from 5% to 10% of their total enrolled debt.  What we like about SettleBankDebt.com We are particularly impressed with SettleBankDebt.com's prices — 5% to 10% fees are practically unheard of in the industry. The downside to these amazing prices is that the company only takes on debt that has already been sent to collections. We love the fact that SettleBankDebt.com has taken a creative approach to tackle the problem of damaged credit scores within the debt settlement industry. Most debtors opt to pay and negotiate with creditors themselves through DIY programs or financial education resources. But for those who are being hounded by debt collectors and need debt help now, SettleBankDebt.com is a great option.   #4 Accredited Debt Relief Accredited Debt Relief has been an industry leader in debt settlement services since its founding in 2008. Through its team of expert negotiators, Accredited Debt Relief has settled thousands of accounts for businesses and individuals alike. The company is also a staunch supporter of charity work and has donated to several prominent charities, including St. Jude's, the Wounded Warrior Project, and the Susan G. Komen Foundation. Accredited Debt Relief is aptly named, received accreditations from both the AFCC, IAPDA and the San Diego Regional Chamber of Commerce. What we like about Accredited Debt Relief Accredited Debt Relief service fees are among some of the lowest we've seen — as low as 15% in some cases. This demonstrates to us that Accredited Debt Relief is sensitive to the financially volatile situation many of its customers find themselves in. In that same vein, the company charges zero upfront account setup fees and has a minimum debt requirement of $7,500 (below the industry average). We appreciate the company's transparency with its "Proven Results" page, which details savings figures for some of its actual customers.   #5 CuraDebt In one form or another, CuraDebt has been assisting individuals and small businesses resolve their debt since 1996-making it one of the most experienced debt settlement providers in the entire industry. CuraDebt has received a number of accreditations and accolades from third-party organizations, such as the AFCC, IAPDA, The Netcheck Commerce Bureau, and the U.S. Chamber of Commerce. What we like about CuraDebt Something that stands out to us about CuraDebt is its approach to the service fee. Rather than charging a range of percentages based on a number of variables, CuraDebt simplifies the process by charging a flat 20% fee on your total debt-which is still less than what some other companies charge. CuraDebt's minimum debt requirement of $5,000 is also the lowest in the industry, which drastically increases the number of people CuraDebt can assist.   Be sure to review the full list of debt settlement companies we've reviewed.   The Future of the Debt Settlement Industry While several steps have been taken to ensure fair and honest practices are being implemented and enforced throughout the industry, debt settlement, as a whole, has a long way to go toward improving its reputation. Many financial experts strongly discourage consumers from using debt settlement as a means to resolve their debt because of the effect it can have on their credit scores. Experts also cite that, at least in some cases, debt settlement can actually result in more debt plus an even poorer credit score. When it comes to financial services in general, the knowledge gap between the financial expert and the average consumer is still very high. In order for debt settlement to remain a serviceable industry, companies must do more to foster good customer relationships. One way to do this is to be more upfront about what the debt settlement process entails, its effects, and who should or shouldn't enroll. Many people don't know that debt settlement is only ideal for those who can resolve their debt quickly, but do not qualify for other options. Companies should maintain compliance with all FTC regulations, and avoid creating false expectations (e.g., duration of the program, total savings, total costs, etc.). As the debt settlement industry continues to grow and evolve, BestCompany.com will continue to provide consumers with the latest news on industry standards, company rankings, and other pertinent news surrounding the industry. Our goal is to empower consumers to make better decisions when it comes to debt settlement; when you choose a top debt settlement company through BestCompany.com, you can rest assured it has been thoroughly inspected and approved beforehand.

If you're in a financial bind, you've probably at one time or another asked yourself, "what do I do now?" Effective solutions for severe financial problems are limited, and not always pretty. Do you declare bankruptcy to pay off your debts? Take on more loans or credit cards? Maybe you've even considered debt settlement as a way to reduce your overall debts by paying one lump sum payment. The problem with debt settlement companies is that there are plenty of phonies out there looking to snag a buck from a helpless victim. So how do you tell who's legit and who isn't? What badges of honesty are out there to prove a company's dependability? According to Best Company, there are three particular organizations that serve as a good measure of legitimacy: the American Fair Credit Council, the Better Business Bureau, and the International Association of Professional Debt Arbitrators. American Fair Credit Council The American Fair Credit Council operates on three basic principles: Support customers dealing with overwhelming credit and debt problems Promote and enforce industry "best practices" Advocate for consumer-centric legislation at the state and federal level that protects consumers through strong regulation and preservation of choice and debt relief The AFCC was founded in 2011 by debt companies whose goals included full compliance with Federal Trade Commission regulations. The organization rose from the ashes of The Association of Settlement Companies after its founders discovered the organization wasn't keeping up with the rapid changes in the credit industry. AFCC members don't handle consumers' funds, and consumers don't pay a fee until their debts are resolved. Better Business Bureau The Better Business Bureau (BBB) was founded in 1912 and operates as a nonprofit organization that gauges marketplace trust. Before 2008, the organization operated solely off a "satisfactory" or "unsatisfactory" rating system, but since then, the organization's rating system has followed a school-like rubric, rating companies on a scale from A+ to F. The BBB Partner Code of Conduct follows six guidelines: Start with Trust Maintain Legal and Regulatory Compliance Advertise Honestly Safeguard Data and Privacy Embody Integrity Report Violations of the Code Accreditation by the BBB means a business has paid a fee to be reviewed against the BBB's accreditation standards. The accreditation doesn't signify an endorsement of products/services or even a guarantee on the quality; it mostly means that the businesses are willing to go the extra step to resolve customer complaints on the BBB website. International Association of Professional Debt Arbitrators The International Association of Professional Debt Arbitrators (IAPDA) started in 2000 when the debt settlement industry was still small and growing. What the IAPDA sought to do was build online training and certification programs for individuals providing debt settlement services. The company claims to be the gold standard for qualification training in the debt settlement, credit counseling, and student loan industries. Since the program is focused on individuals, entrepreneurs can become IAPDA-certified as well as major corporations. When an individual passes the IADPA certification process, the customer can feel sure that the individual classifies as a Certified Debt Specialist, Certified Credit Counseling Specialist, and Certified Student Loan Professional. As time goes by, more and more states are instituting laws that indicate you can only work with debt companies that are trained and certified. This means that those who are already certified through IAPDA are industry-respected specialists that are keeping up to date on current debt relief business laws and requirements. What Does This Mean? Accreditations serve as badges for companies marking legitimacy, expertise, and experience. Customers should recognize companies with these certifications as quality companies to do business with. Best Company has listed among their grading criteria what debt settlement companies are accredited with all of these institutions. Some of these companies include Freedom Debt Relief, Pacific Debt Inc., and Accredited Debt Relief. Appropriately, all of these companies have achieved a rating of 8.5 or higher based on hundreds of consumer reviews. A full list of debt settlement companies can be found on our website.