Best Debt Relief Companies of 2023: Expert Reviewed

By the end of 2021, U.S. consumers carried an average credit card balance of $5,221 and an average personal loan of over $17,000. While consumers struggling to pay off this debt have few places to turn, debt relief companies aim to help by negotiating with creditors to consolidate their debt and pay less than they owe. While this industry has its share of bad players, we compared reputable debt relief companies to help you find a reasonable, fair, and transparent debt relief plan to help you get out of debt for good.

Best Debt Relief Companies - Full Overview

The best debt relief companies that made our ranking offer clear and transparent pricing and an array of services to help their clients get out of debt. The following company reviews can help you decide which of these companies might work best for your needs.

How We Rate Debt Relief Companies

In order to rate the best debt relief companies on the market today, we researched organizations and their backgrounds, as well as the programs and services they offer.  The categories we looked at with each of the debt relief companies we profiled include the following:

• Costs and Fees: We compared debt relief companies based on their published costs and fees. We gave preference to companies that were entirely upfront and transparent about their fees, and we looked at both upfront fees and ongoing fees for services.
• Customer Experience: We considered the quality of the customer experience with each of the companies we profiled. This meant looking at the online portals of each of the providers, as well as the different ways customers can contact them during their opening hours.
• Services and Solutions: In this category, we looked at the availability of debt relief services based on geographic location and minimum debt level requirements. We also considered the breadth of services offered, which may include debt consolidation, debt settlement, credit counseling, and more.
• Trustworthiness and Stability: Factors considered in this category include length of business history, how many customers a company has helped, the amount of debt each provider has managed, and relevant memberships in industry-leading associations. 
• User Reviews: Finally, we considered reviews from past users on platforms like Trustpilot. From there, we gave preference to debt relief companies who have a large number of positive testimonials from past customers.

Best Debt Relief Companies - Main Features

What Is Debt Relief? 

The term "debt relief" is used to describe a process that lets consumers settle their debts for less than they originally owed. Debt relief is offered by the best debt relief companies, all of which charge a fee (usually 15% to 25%) once their services have been performed.

Typically, a debt relief company will negotiate with your creditors and consolidate all of your unsecured debt into one monthly payment. Instead of paying your creditors, you’ll pay the debt relief company. If done correctly, you’ll pay less per month and less overall than you would if you continued paying your creditors.

How Do Debt Relief Companies Work?

Debt relief organizations start the process by helping their clients make a list of all the debts they owe. From there, they create a plan for their clients that has them making payments to a bank account each month instead of paying their creditors. 

Once the account has enough money in it, the best debt relief companies use the funds to negotiate the client's debts for less than they owe. Typically, this entire process takes between 24 to 48 months to complete, and clients can save up to 50% off the original amount they owed after accounting for fees.

Debt Relief vs. Debt Consolidation: What’s the Difference? 

Where debt relief helps clients negotiate a settlement on their debts, debt consolidation works differently. For example, some clients consolidate their debts with a balance transfer card that lets them pay down debt at 0% for a limited time in exchange for a balance transfer fee. This strategy can work well if someone is disciplined enough to pay as much as they can toward their debts during the card's intro APR offer, and if they also stop using credit cards for new purchases along the way.

Other times, individuals sign up for debt management programs. With this type of debt relief program, a third party company collects a monthly payment from their clients that is used to pay down their debts over time. Consumers do pay fees for debt management programs as well, although how much they pay can vary from company to company.

When working with a debt relief company, they will work with your creditors to both consolidate your debt and lower the total amount that you owe. In short, a debt relief company is consolidating your debt, too.

Debt Relief vs. Bankruptcy: Which is Right for You?

Debt relief can be a good option for people who have ample income to repay their debts but struggle to stay on track. After all, debt settlement still requires clients to make monthly payments toward an account that will be used to settle unsecured debts later on. The benefit comes in the form of having a debt relief company working on their behalf, and in the savings they get when debts are settled for less than they owe.

Chapter 7 bankruptcy can be a better option for people who do not currently have a way to pay off their unsecured debts. With this type of bankruptcy, unsecured consumer debts are wiped away in order to let people get a fresh start. Individuals can also consider Chapter 13 bankruptcy as well, which is a type of bankruptcy that creates a debt payoff plan that lasts 3 to 5 years. 

Consider debt relief if:

• You have a stable income 
• Debt settlement makes sense for your goals
• You want to resolve your debt issues within 24 to 48 months

Consider bankruptcy if:

• Your debts are too significant to get resolved within four years
• You are choosing Chapter 13 bankruptcy to avoid foreclosure on your home
• Job loss has left you unable to pay your bills

How Does Debt Relief Affect Your Credit? 

According to the Federal Trade Commission (FTC), debt settlement comes with significant risks since your creditors are not required to reach an agreement with the debt relief company. In the meantime, the fact you're asked to make payments to a separate bank account instead of your creditors means you're putting your credit rating at risk for the entire duration of your plan.

Beyond damage to your credit score, the FTC warns that your debts can continue to accrue late fees and penalties "that can put you further in the hole." You may also be contacted by creditors or debt collectors, and you may even be sued for repayment.

What Are Alternatives to Debt Relief?

If you're struggling with debt but you're unsure about debt settlement in particular, there are several other debt relief solutions to keep in mind. 

• Balance Transfer Credit Cards: Balance transfer credit cards let consumers consolidate and pay down debt at 0% APR, but only for a limited time. In exchange for this benefit, individuals are required to pay a balance transfer fee that is usually around 3% of the debt amount they transfer. Also note that debts not paid off during the introductory period begin accruing interest at the card's regular APR.
• Credit Counseling: Credit counseling is a form of mentoring that can help individuals pay off their debts on their own. Individuals usually do so by creating a budget and working with their counselor on a plan to repay their debts.
• Debt Management Plans: Debt management plans require applicants to make a single monthly payment to the debt management company. The company then uses those funds to make payments toward each of the client's debts every month.
• Home Equity Loan or Line of Credit: If you own a home and owe less on it than it’s currently worth, you could consider a home equity loan or line of credit to pay off your debts. Home equity loans have significantly lower interest rates than other forms of borrowing. Keep in mind, though, that if you fail to make your home equity payment, you’re at risk of losing your home.

Conclusion 

The best debt relief companies can help you pay down debt and settle for less than you owe, but you should do some research upfront so you know what you're getting into. For example, some debt relief companies charge higher fees than others, and you may need to meet specific requirements (like a minimum debt amount) to work with certain companies. 

In the meantime, you should do some research so you understand the impacts of debt settlement on your credit score. While any damage debt relief causes to your credit may not last forever, you should know that missing payments on your debts can cause your credit score to plummet within a few months of time. 

At the end of the day, debt settlement may provide exactly what you need, but there are other debt relief solutions to consider before you dive in.