We Recommend You Look Into Debt Settlement
This recommendation comes because you have credit card and/or unsecured debt that either did not come from a financial hardship or is too high to consolidate. Debt settlement is an extreme approach to getting out of debt. It is for people who can barely afford their credit card’s minimum monthly payments and don’t see an end in sight. If this sounds like you, you can become debt free through debt settlement!
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How It Works
When you sign up for debt settlement, a company will negotiate with your creditors on your behalf to lower the amount you owe (you will end up only paying around half of what you actually owed).
Your debt settlement company can do this because 1) it has an established relationship with credit card companies and 2) credit card companies would rather get some of your money than have you declare bankruptcy.
To show you can’t afford your debts, your debt settlement company will ask you to go delinquent on all your accounts (stop paying them), and set aside your money each month in a new account (controlled by you). When you have saved enough money, your debt settlement company will settle your accounts for you, one by one.
| Pros of Debt Settlement | Cons of Debt Settlement |
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Top Debt Settlement Companies
We recommend working with one of the following Debt Settlement companies:
Pacific Debt*
- One of the least expensive companies in the industry—17-20% of total debt owed
- Certified with all major industry accreditations
- In business since 2002
- Consumer score: 9.7/10
- Minimum $7,500 in debt required for settlement services
*Pacific Debt is only available in the following states: AK, AL, AR, AZ, CA, CO, FL, IA, ID, IN, MA, MD, MI, MN, MO, MT, NC, NE, NM, NY, OK, PA, TX, UT, VA
Freedom Debt Relief*
- Average industry prices—15-20% of the debt you owe
- Cerified with all major industry accreditations
- In business since 2002
- Consumer score: 8.6/10
- Minimum $7,500 in debt required for settlement services
*Freedom Debt Relief is only available in the following states: AK, AL AR, AZ, CA, CO, DE, FL, HI, IA, ID, IN, KS, KY, LA, MA, MD, MI, MN, MO, MS, MT, NC, ND, NE, NM, NV, OH, OK, PA, SD, TN, TX, UT, VA, WI, WY
Superior Debt Relief*
- Average industry prices—18-25% of the debt you owe
- Missing certificates from some major industry accreditations
- In business since 1998
- Consumer score: 8.2/10
- Minimum $10,000 in debt required for settlement services
Superior Debt Relief is only available in the following states: AK, AL, AR, AZ, CA, CO, DE, FL, IA, IN, MA, MD, MI, MN, MO, MS, NC, NE, NM, NV, NY, OH, OK, PA, SD, TDX, VA, WY
Don’t see a debt settlement company in your state? Check out our entire list of debt settlement companies.
- Takes your existing debt and try to settle with your creditors for a lower amount. If you pay off the settled amount, your debt will be considered paid in full.
- Negotiates with your creditors on your behalf.
- Fee based on a percentage of your total starting debt or a percentage of the debt they save you.
- Most settlement companies have you create a separate "escrow" account where you will make monthly contributions over a certain amount of time to contribute to your settlement. Once there is a substantial amount of funds to show your creditors, the settlement company will try to negotiate a lower amount of debt.
- Combines all your debts and creditors into one monthly payment.
- Allows you to pay one monthly payment to the consolidation company, instead of multiple payments to different creditors.
- You no longer owe your original creditors; instead you pay one monthly payment to your consolidation company.
- Consolidation companies can help negotiate lower interest rates on your debts and help lower your total debt payment in the long run. A lower interest rate will lower the amount you owe in the end.
- Allows you to consolidate all your different debts into one personal loan that can be paid off over time.
- Can offer borrowers a lower interest rate with a longer payback term (compared to high-interest credit cards or medical bills). This will lower the amount of money required to pay off the loan over time.
- Personal loan debt consolidation can be an effective way to raise your credit score quickly (within 3-6 months).
- Borrowers can receive funds from their loan within only a few days.
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