Best Debt Settlement Companies for 2020

Debt settlement is when a company negotiates with your creditors on your behalf to reduce the amount you’ll pay. The rest of the debt is typically forgiven. If you already know that debt settlement is for you, take a look at the best debt settlement companies of 2020 that came out on top during my research.

Freedom Debt Relief

Freedom Debt Relief
Min. Loan Max. Loan Fixed APR
$1,000 $100,000 N/A

on lender's secure website

National Debt Relief

National Debt Relief
Min. Loan Max. Loan Fixed APR

on lender's secure website

Pacific Debt

Pacific Debt
Min. Loan Max. Loan Fixed APR
$1,000 $100,000 N/A

on lender's secure website

The Top Debt Settlement Companies for 2020

It sounds like a sweet deal, but debt settlement is a very serious step you shouldn’t take without a full understanding of the process. If you need help understanding what debt settlement is and whether it’s right for you, I provide a detailed guide later in this post.

If you’re drowning in debt, you’re hardly alone. The average US household credit card debt among indebted households is $15,216.

Read on to discover why I chose these companies as the best debt settlement companies. I’ll also discuss whether debt settlement is the right choice for you, what you need to know about the process and its risks, alternatives to debt settlement, and how to avoid scams.

The Best Debt Settlement Companies

Freedom Debt Relief

As the largest debt settlement company in the nation, Freedom Debt Relief has enrolled over 600,000 clients in their program. They are one of the most experienced debt relief companies out there, having settled over $10 billion in debt since 2002. The company’s website clearly outlines the benefits of the Freedom Debt Relief program and provides reviews and testimonials from satisfied clients. With an affordable debt relief program that could significantly reduce what you owe, an online Client Dashboard where you can track your progress through their program, and customer service available every day of the week, Freedom Debt Relief is a leader in the debt settlement industry. The company is accredited and a founding member of the American Fair Credit Council, member of the platinum International Association of Professional Debt Arbitrators member and all of its Debt Consultants are IADPA certified.

Freedom Debt Relief is available in more than 40 states, including: Alabama, Alaska, Arizona, Arkansas, California, Connecticut, Delaware, Florida, Georgia, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Montana, Nebraska, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Ohio, Oklahoma, Pennsylvania, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, and Wisconsin. It is also available in Washington, D.C., Guam, Puerto Rico, and American Samoa.

Who It’s Best For: If you’re dealing with over $10,000 in personal loan, medical, credit card debt, or certain private student loans, Freedom Debt Relief could be the right option for you. Since Freedom Debt Relief has a longer relationship with most lenders and debt collectors, they could get better settlements than most other companies.

Who Should Pass: Mortgages, auto loans, and federal student loans do not qualify for the Freedom Debt Relief program. Freedom Debt Relief is not available in Hawaii, Illinois, New Hampshire, North Dakota, Oregon, Rhode Island, Vermont, Washington, West Virginia, or Wyoming.

National Debt Relief

A lot of debt settlement companies’ websites are short on specifics. It’s not hard to figure out why: They want you to call so they can hook you with a hard sell. But National Debt Relief does a pretty good job telling you what you can expect from debt settlement. The site details what kinds of debt qualify, how much you need to enroll, the fee you can expect to pay (20%), and the average savings after fees (30%). The company works with a wider range of debt than most. National Debt Relief also has an A+ rating with the BBB, and is accredited with the AFCC and IAPDA.

National Debt Relief is available in an impressive 41 states. One turnoff: A long list of state-specific links made it more difficult than necessary to determine exactly where the company provides settlement services. (You’re out of luck in Connecticut, Georgia, Kansas, Maine, New Hampshire, South Carolina, Oregon, Vermont, and West Virginia.)

Who It’s Best For: If you have some more niche types of debt — for instance, unsecured business debt — National Debt Relief may still be able to help. It even considers cases involving student loans on a case-by-case basis. The enrollment minimum is also relatively low at $7,500.

Who Should Pass: If you’re wary of newer companies, note that National Debt Relief is less established than some of its competitors, having been established in 2009. Its average debt reduction is also a bit lower than that of some competitors. If you want to go with a more experienced company, Freedom Debt Relief may be a better option for you.


CuraDebt is another debt-settlement service with an impressive savings average: 40% after fees. It also will consider working with business debt on top of other major unsecured debt. It offers a customer-service bonus with online chat, a nice perk for potential clients who may not want to call right away. It is accredited with the AFCC and IAPDA, but not the BBB. CuraDebt has recently improved its website to be more transparent, but it could still be better organized.

CuraDebt’s services are available in 37 states. You’re out of luck in Colorado, Connecticut, Georgia, Idaho, Illinois, Kansas, North Dakota, New Hampshire, South Carolina, Vermont, Washington, Wisconsin, and West Virginia.

Who It’s Best For: CuraDebt says it will work with as little as $5,000 in debt in certain circumstances, so if you have a smaller amount of debt, it might be worth a look. Incorporated in 2000, CuraDebt is also one of the more established debt-consolidation companies.

Who Should Pass: If you put a lot of stock in Better Business Bureau accreditation, note that CuraDebt doesn’t have it (though it does have an “A+” rating). And CuraDebt won’t be an option if you live in the 13 states where it doesn’t do business. Unlike Freedom Debt Relief, which has enrolled more than 500,000 clients since 2002, CuraDebt states that they have only counseled 180,000 clients with their program.

New Era Debt Solutions

Transparency is lacking in the debt-settlement industry, but New Era Debt Solutions bucks this trend with a more transparent website than most companies I evaluated. It is by far the most thorough in terms of explaining what prospective clients need in order to qualify.

The “truth and transparency” section not only lists important basics such as the length of the program, fees, and average debt reduction, but also other facts such as how many clients drop out of the program. It even details how many clients are sued by creditors during the settlement process and is honest about the fact that clients will continue to receive calls from collectors.

New Era has a shorter time frame than many companies, at an average of 27 months. Its fees are lower than those of many competitors at 15%, and it has a higher average debt reduction at just under 44%.

Who It’s Best For: If you put a lot of stock in longevity, New Era was incorporated in 1999. It’s also accredited by the BBB and IAPDA, and its website offers a more thorough look at the debt reduction process than is typical. Unlike most companies that require $7,500, $10,000 or more, New Era also doesn’t have a minimum debt requirement.

Who Should Pass: New Era is only available in 17 states (Alabama, Alaska, Arizona, Arkansas, California, Florida, Indiana, Massachusetts, Michigan, Nebraska, New Mexico, New York, North Carolina, Oklahoma, Pennsylvania, Texas, and Virginia) so you’re out of luck outside those states. It also does not work with anything other than basic debt.

Other Companies to Consider

Donaldson Williams is one of the few companies that didn’t charge upfront fees for debt settlement before 2010 when federal regulations began prohibiting the practice. The company also doesn’t force you to open a separate account to manage your settlement money, which could be reassuring to potential clients. Its 17% fee, charged on what you save, is among the lowest I saw. However, it can be a bit harder to get in touch with a representative at this small company. Donaldson Williams also requires more debt ($15,000) to consider working with you.

Debt Relief A La Carte, run by a former collection agent, offers a unique service in the debt-settlement industry: A short-term debt settlement program that averages only 72 days to complete. The results are also impressive: 43% after fees, which are charged only on the amount saved, not the amount enrolled. The website is thorough, with answers to almost any question you may have. The catch? You need the financial resources to settle your debt very quickly when you join — for most people, this isn’t the case. The company is also small and must be choosy about new clients.

ZipDebt could be a viable option if you want to try settling your debt yourself but don’t know where to start. For a flat fee ranging from $197 to $777, you receive a range of materials aimed at helping you bypass settlement companies while avoiding bankruptcy. ZipDebt backs its materials with a 365-day money-back guarantee. The downside here is obvious, however: The idea of attempting debt settlement yourself might be too daunting and time-consuming to seriously contemplate.

How To Pick the Best Debt Settlement Companies

The best debt settlement company isn’t simply the one that advertises the best average reduction in your debt. Results are certainly something to consider, but general transparency, fees, and customer support are among the other factors I considered:

  • Accreditation: The best debt settlement companies are accredited by organizations including the American Fair Credit Council (AFCC), the International Association of Professional Debt Arbitrators (IAPDA), and the Better Business Bureau (BBB).
  • Longevity: Companies that have been in business longer have more of a reputation to uphold and less incentive to engage in shady business practices.
  • A clear, comprehensive website: You’ll probably have dozens of questions about the debt settlement process. The best debt settlement companies have clear descriptions of their services and fees as well as extensive FAQs.
  • Low fees: The best debt settlement companies keep their fees low relative to the competition.
  • Low minimum debt: The best debt settlement companies don’t shut out customers with lower total debts. While $10,000 is a typical minimum, the best companies will work with you even if you owe a bit less.
  • A variety of debts: Nearly all debt settlement programs will try to settle credit-card debt and medical bills, for example. The best companies are also willing to try settling business debt, certain student loan debt, and even some very specific secured debt.
  • A reasonable timeline: A typical debt settlement timeline is two to four years. The best companies can settle debts more quickly if you have the resources.
  • Extensive customer support: It should be easy to get in touch with company representatives via phone and email. Online chat is a nice bonus. While free consultations are standard among debt settlement companies, the best companies assign you a program manager who functions as your contact and advocate when you sign up. They also allow online account management.
  • Savings to you: Though what you save will largely be a function of how much you owe and to whom you owe it, the best debt consolidation companies should be able to save you at least 30% on your debt after their fees.
  • Transparency of reach: States regulate debt settlement companies in different ways. Because of this, most companies only do business in certain states. The best debt settlement companies are forthright about where they do business.

Before you sign on the dotted line with these or any other debt-settlement companies, read on to make sure you know as much as possible about debt settlement. I’ll cover the debt settlement process, how it differs from other debt relief programs, risks, alternatives, and how to avoid scams.

What Is Debt Settlement?

A debt settlement company negotiates with creditors on your behalf. When you sign up, you’ll likely begin contributing to a special account set up by your debt settlement company. Once it reaches a certain level, the company will reach out to your creditors in hopes that they’ll accept a lump sum that’s less than what you actually owe. After that sum is paid, you’re no longer indebted to the creditor. How long it takes largely depends on how quickly you can save enough to begin negotiations, but most companies allow two to four years for the process.

Note that debt settlement is different than debt consolidation and debt negotiation. Debt consolidation doesn’t reduce your loan principals, but it allows you to pay one bill to one company with a lower interest rate. In debt negotiation, a company negotiates with your creditors to lower your interest rates and monthly bills, but your loan principals typically remain the same.

Who might consider debt settlement?

First, you need to have the right type of debt. Debt settlement is typically only a viable option for unsecured debt. That’s debt from credit cards, medical bills, or other debts that don’t involve collateral. Your mortgage and car loan are examples of secured debts, or those that do involve collateral. When you don’t pay secured debts like these, your creditor can take your home or car to help settle your debt. Note that student loan debt, though unsecured, is often ineligible for debt settlement except in rare cases.

Second, you need to be suffering from legitimate financial hardship. Common reasons for financial hardship include unemployment, death of a spouse, and extreme overspending. Though there are several things that might prevent you from paying your debts, the bottom line is that qualifying for debt settlement means you have almost no chance of being able to repay your debts on your own. You’re unlikely to be accepted into a debt settlement program if this isn’t the case.

What are the disadvantages of debt settlement?

If debt settlement were as simple as hiring a company to let you off the hook for some of your debt, far more people would take advantage of the process. But while the upside is obvious (paying back less of the debts you owe), there are several very real downsides to consider:

  • Big fees: Debt settlement isn’t free. Though most companies are no longer allowed to charge upfront fees (and you should not do business with any company that does), they still make their money by taking a hefty percentage of the debt you enrolled after they settle.
  • Short-term risks: You will have to save enough money to even begin the settlement process, but your debts don’t go away during that time. That’s bad news for your credit report as debts go past due. You may also rack up more late-payment fees and interest-rate hikes as you save and work through the settlement process, depending on your debt. You also risk being sued by your creditors.
  • Long-term risks: After the settlement, instead of saying “paid in full,” your credit report may simply say your debt was “settled.” This can understandably spook future creditors, who now know you ultimately paid less than what you owed. In turn, that can make it tough for you to get lenders to give you a second chance.
  • Tax liability: If your creditor agrees to accept an amount that’s more than $600 less than your original debt, the amount that’s forgiven will be reported to the IRS. Your forgiven debt will be considered income, and you may have to pay taxes on it unless you are able to prove insolvency.

Alternatives to Debt Settlement

If the risks of debt settlement seem too daunting, there are alternatives that can help you get out of debt. Of course, all of these strategies have their own pros and cons, and only you can decide whether they are better or worse for your unique situation.

Do it yourself

Some creditors won’t even negotiate with debt settlement companies. Of the creditors who will negotiate with them, some might refuse to cut your debt by a greater percentage than what they would offer you directly. For that reason, many experts say it’s wise to try negotiating directly with your creditors before turning to debt settlement companies. If the idea of DIY debt settlement is appealing but you still want expert guidance, check out ZipDebt, reviewed above.

Credit counseling

Counselors working on behalf of reputable nonprofit credit-counseling agencies can help you create a plan to better manage your money and budget for debt payments. Of course, this strategy doesn’t actually reduce your debt, but it also has far fewer risks than settlement or consolidation and negotiation, discussed below.

Debt consolidation

As I mentioned earlier, debt consolidation doesn’t reduce your loan principals, but it allows you to pay just one bill to one lender with a lower interest rate.

I go into debt consolidation in detail in this separate post about debt consolidation loans, but it usually comes in the form of an unsecured personal loan from a bank, a credit union, or an online lender. Credit cards with loan interest rates are another option. Those with very bad credit may turn to secured loans such as home-equity loans that use their assets as collateral in case of default.

The major downside of debt consolidation is that your lower payments make it easier to get into trouble again, and you may end up paying a lot more over the life of your consolidated loan because of a longer loan term. For more on debt consolidation, see my separate post on the best debt consolidation loans.

Debt management

In a debt management plan, a company negotiates with your creditor to lower your interest rate and monthly bills, but your loan principal remains the same. You’ll pay the company, and they distribute the money to your creditors.

Your credit can take a hit from participating in these programs if the company isn’t on the ball with payments, however. It can also be tricky to separate legitimately helpful programs from scams and shady fly-by-night companies. For more on debt management, see my separate post on the best debt management companies.


For most people, bankruptcy is the nuclear option. The negative implications of bankruptcy can certainly be severe, including a massive impact on your credit. However, the jury is out on whether it’s better or worse than debt settlement.

Of course, bankruptcy attorneys will tell you bankruptcy is better than debt settlement, while debt settlement companies will tell you the opposite. There is no one-size-fits-all-answer to this question, but you have nothing to lose by investigating both options, preferably with the guidance of an unbiased expert.

One thing to consider: If you’re eligible for Chapter 7 bankruptcy, the process can be over fairly quickly and with reasonable certainty that your unsecured debts will be forgiven. Debt settlement, on the other hand, is more of a question mark. If you compress the process into as short a time frame as possible with a skilled company that effectively settles your debts, this can be preferable. But the process can also drag on for years with no guarantee of success.

Avoiding Debt Settlement Scams

If you’ve weighed the pros and cons of debt settlement and want to give it a go, consider these last cautionary tips as you search for a reputable company. While the industry has come a long way since a federal crackdown on unsavory practices in 2010, you’ll still need to keep the following in mind to avoid scams:

  • You should be the one to initiate contact. Shady companies are more likely to aggressively search for and hound potential clients.
  • Do your homework. Look at the company’s Better Business Bureau rating and any other online reviews you can find. Almost every company will generate complaints, but some will generate far more than others.
  • You shouldn’t pay any upfront fees. In 2010, the Federal Trade Commission banned these for any company that does business over the phone, driving many shady companies out of business. But some continue to find loopholes in the rules.
  • No company can guarantee results. It’s ultimately up to your creditors, not the debt settlement company, whether or not they will settle your debts. If you see such a guarantee, move along.
  • Collection calls and lawsuits are still a risk. A debt settlement company can’t stop a creditor from these actions if they’re determined to take them.
  • The company has to make several disclosures before you sign up. Those include what you’ll be paying, how long the program will last, and the potential negative effects of not paying your creditors during a settlement plan.

The Bottom Line

As you look for the best debt settlement companies, keep one word in mind: Transparency.

The best debt settlement companies won’t keep you in the dark about any crucial information simply because they want your money. They will also have competitive fees, comprehensive customer support, clear websites, and savings rates in line with or better than their competitors.

If you’re uncertain where to begin, Freedom Debt Relief, National Debt Relief, CuraDebt, and New Era Debt Solutions are particularly worth a look.

Unsure if debt settlement is the right for you? Check our other articles and resources on debt reduction to evaluate your other options:

Saundra Latham is a personal finance writer and editor. Her work has appeared in The Simple Dollar, Business Insider, USA Today, The Motley Fool, Livestrong and elsewhere.