Debt Settlement Company

Need Help with Debt Consolidation? Here’s How to Choose the Right Debt Settlement Company

Are you drowning in credit card debt? According to the New York Federal Reserve, approximately 35% of U.S. households carry credit card debt and the average for indebted households is more than $15,000.

If you have consumer debt, reducing or eliminating that debt should be your primary goal.

Debt consolidation: your options

If you’re looking at consolidating your debt, consider the following options:

Let’s review each one by one:

Debt consolidation: loans

Several different types of loans can be used to consolidate debt. Consider:

Home Equity Lines of Credit (HELOC) – If you’ve owned a home for several years and have some equity, this could be an option. Just be aware that you are also risking foreclosure should you not pay the loan back promptly.

Secured Personal Loan – While this is an option, it isn’t a very viable one. A secured personal loan might be something like a car title loan, where interest rates can reach well above 90% APR.

Unsecured Personal Loan – If you can qualify, an unsecured personal loan might be one of your best options. The loan isn’t tied to any of your personal property, and you can shop around for the best terms.

Bad Credit Business Loan – If you own a small business or if your debt is business-related, you might qualify for a business loan. One choice is a company like Funding Circle, that lends directly to small businesses (min. $25,000).

Top personal loan providers for debt consolidation

The idea behind debt consolidation loans is to consolidate all your high-interest debts into one with lower interest rates and better terms. However, there are more than one type of debt consolidation loan.

Unsecured personal loans are the most common type of debt consolidation. They are also the most popular reason for applying for a loan.

Two things to keep in mind when comparing personal loans are your credit score and fees.

Low-interest unsecured personal loans are only available to borrowers with excellent credit. If your credit needs some work you may not qualify for a loan with lower rates than your current debt. Don’t forget about origination and penalty fees either.

Some lenders advertise competitive rates but gloss over hefty origination fees of up to 6%. These fees are typically deducted from the loan amount so keep this in mind when determining how much you want to borrow.

WEIGH THE PROS AND CONS

Compare the pros and cons to make a better decision.

Pros
  • Lower interest rate with good credit.
  • Lower payment.
  • The convenience of paying one lender each month.
  • No collateral required.
  • Easy application process and fast approval.
  • If approved, funds will be transferred to your account within a few days.
Cons
  • Loan origination and administration fees may apply.
  • Must have good credit to qualify for a good interest rate.
  • Longer loan terms could cost you more in interest.

Debt settlement companies

In some cases, consolidating your debt is not feasible. In such cases debt settlement can be a preferable option to getting further into debt or declaring bankruptcy.
Here are a couple of things to consider when looking for a debt settlement company.

Do they have minimum and maximum limits on the amount of debt you can enroll?

Most companies require you to have a minimum amount of debt, which is usually around $10,000. Some lenders, such as Freedom Debt Relief, accept lower amounts. Other companies also have a maximum amount of debt you can enroll, such as $100,000. You will need to find a company with requirements that match your needs.

What is their customer service like?

We typically don’t care about the customer service of a company until we run into problems or have questions. It is important to find out ahead of time about the level and quality of support provided by a company. You can do so by researching the support channels they offer (phone, email, live chat, etc.) and by reading reviews from past customers. Look for companies like Debtmerica Relief and Rescue One Financial which are recommended by our community of users.

Find more details and users reviews in Debtmerica Relief SuperMoney profile.

WEIGH THE PROS AND CONS

Compare the pros and cons to make a better decision.

Pros
  • Debt reduction typically ranges between 45% and 60% of enrolled debt
  • Competitive fees
  • Member of the American Fair Credit Council (AFCC)
  • Debt consultants are certified by the International Association of Professional Debt Arbitrators (IAPDA)
  • A+ rating with the Better Business Bureau
Cons
  • A minimum debt of $7,500

National Debt Relief is a debt settlement company based in New York City. Since it was founded in 2008, it has helped more than 100,000 families resolve over $100 million in unsecured debts.

Find more details and users reviews in National Debt Relief’s SuperMoney profile.

WEIGH THE PROS AND CONS

Compare the pros and cons to make a better decision.

Pros
  • Average debt reduction of 50% (30% after fees)
  • Competitive fees (average of 20%)
  • Member of the American Fair Credit Council (AFCC)
  • Debt consultants are certified by the International Association of Professional Debt Arbitrators (IAPDA)
  • A+ rating with the Better Business Bureau
Cons
  • Minimum debt of $7,500
  • Does not accept certain unsecured loans, such as car repair bills, insurance policies, and recent cash advances

Pacific Debt was founded in San Diego, California, in 2002. It has lower than average fees and is accredited by the leading trade organizations.

WEIGH THE PROS AND CONS

Compare the pros and cons of Pacific Debt to make a better decision.

Pros
  • Low fees when compared to other debt settlement firms.
  • Accredited by leading debt settlement industry trade associations.
  • Debts of $10k or above qualify for these services.
  • Qualified financial counselors are available.
Cons
  • It doesn’t offer a money back guarantee.

Rescue One Financial was founded by Branden Millstone and Bradley Smith in 2007. It has its headquarters in Irvine, California, but it offers services to borrowers in 22 states.

WEIGH THE PROS AND CONS

Compare the pros and cons of Pacific Debt to make a better decision.

Pros
  • Fees are lower than average.
  • Member of the leading trade associations.
  • Debt relief available for personal and business debts.
  • Offers a money back guarantee.
Cons
  • Only considers debts of over $15,000.

CreditAssociates is based in Dallas, TX, and was founded in 2016. It has a low debt minimum and competitive fees. Find more details and users reviews in CreditAssociates SuperMoney profile.

WEIGH THE PROS AND CONS

Compare the pros and cons to make a better decision.

Pros
  • Competitive rates (25% of enrolled debt)
  • Member of the American Fair Credit Council (AFCC)
  • Low minimum debt requirement
Cons
  • Does not provide tax debt relief

Debt consolidation: balance transfer cards

Are you enticed by the lure of balance transfer cards? Some major credit cards offer low interest rates – or even 0% during an introductory period – making them tempting vehicles to consolidate debt. A balance transfer arrangement is a great option if you can pay off the entire amount in a year or two. Here’s why:

These cards typically offer a 0% (or low interest) APR for 12 to 21 months. Once that period is up, though, you’ll likely be charged a high interest rate, which averages 18.5% on these cards.

Also, keep in mind that balance transfer credit cards typically charge a transfer fee that ranges from 3%-5% of your debt balance. If you’re transferring $15,000 in debt, you could pay anywhere from $450 to $750 in upfront fees.

Three of the best balance transfer cards

When shopping for a balance transfer card, focus on balance transfer fees, the length of the 0% APR balance transfer period, and standard interest rates, Here are three of the best balance transfer credit cards available.

Citi Simplicity has the longest 0% APR period of all balance transfer credit cards. As such, it offers the largest potential for saving money on interest payments.

Simplicity is true to its name. It doesn’t have late fees or an annual fee either. However, it does charge a 3% transfer fee.

The standard rates for this card vary from 13.24—23.24% APR based on your credit.

Find more details and users reviews in Citi Simplicity SuperMoney profile.

WEIGH THE PROS AND CONS

Compare the pros and cons to make a better decision.

Pros
  • 21 months 0% APR intro period, longest of reviewed cards
  • No late fees or penalty APR
  • No annual fee
  • You can transfer other types of debt besides credit card debt, such as student loans and auto loans
  • Free monthly access to FICO scores
Cons
  • A 3% transfer fee ($5 minimum)
  • No rewards or signup bonus
  • You need excellent credit
  • You can’t transfer debt from other Citi accounts

Citi’s Double Cash Card has the second-longest 0% APR intro period (18 months) and offers 2% cashback on all purchases. There is no annual fee but you do have to consider a 3% transfer fee. Standard rates range from 13.24-23.24% APR.

Find more details and users reviews in Citi Double Cash Card SuperMoney profile.

WEIGH THE PROS AND CONS

Compare the pros and cons to make a better decision.

Pros
  • 18-month 0% APR period
  • No annual fee
  • High rewards rate (2% cash back)
Cons
  • 3% balance transfer fee ($5 minimum)
  • 3% foreign transaction fee
  • 5% cash advance fee ($10 minimum)

Slate is the workhorse of balance transfer cards. It’s the only balance transfer card that doesn’t charge a fee on balance transfers. The only catch is the $0 transfer fee only applies to transfers made within the first 60 days of opening an account.

Once the intro rate expires, rates vary from 13.24-23.24% APR depending on your credit.

Find more details and users reviews in Chase Slate SuperMoney profile.

WEIGH THE PROS AND CONS

Compare the pros and cons to make a better decision.

Pros
  • 15 months of 0% APR on purchases and balance transfers
  • No annual fee
  • No transfer fees on balance transfers made within the first 60 days
  • Free FICO score every month
  • No penalty APR
Cons
  • No rewards
  • No signup bonus aside from the 0% APR
  • Maximum debt transfer of $15,000
  • You can’t transfer debt from another Chase account
  • And you need a credit score of 690 or higher to qualify