best debt settlement companies

Best Debt Settlement Companies of 2018

Debt continues to be the top cause of stress for Americans. According to the 2017 “Stress in America” report, the majority of Americans said that money (62
percent) and the economy (58 percent) are significant sources of stress (source). Stress certainly doesn’t help when it comes to making smart financial choices. It’s easy to get confused by all the debt relief options available.

Debt settlement companies can negotiate with creditors on your behalf and potentially cut your debt in half. That was the finding of a nine-year study into debt settlement programs commissioned by the American Fair Credit Council (AFCC). The study analyzed 1.9 million accounts and found that the average settlement of an account enrolled in a debt settlement program is 48 percent of the original balance (source). That’s less than half the initial debt.

Cutting your debt in half may sound like a no-brainer, but negotiating a debt settlement is a serious decision you should not take lightly. Finding the right company is crucial. This article will provide SuperMoney’s list of Best Debt Settlement Companies of 2018. It will also explain our methodology, so you can learn how to find reliable companies by yourself.

The CFPB’s Advice on Debt Settlement Companies

The Consumer Financial Protection Bureau provides valuable tips when choosing a debt settlement company. In a nutshell, the CFPB recommends you avoid companies that:

  • Charge fees before they settle an account
  • Refer to a “new government program” that can bail you out of your credit card debt. Spoiler alert: there isn’t one
  • Guarantee they can make your debt disappear
  • Promise they can stop debt collecting actions
  • Do not provide a clear price estimate for its services

The CFPB’s tips are a good starting point, but there are more things to consider when choosing a debt settlement company.

SuperMoney’s Methodology


Keep away from companies that say debt settlement won’t hurt your credit score. It will. The same applies to firms that claim they can keep debt collectors from calling you or lenders from suing you. They can’t.


Low cost is important, but so are flexible payment options. Shy away from firms that aren’t willing to provide a clear fee schedule.

Variety of Debts

Some debt settlement companies will only deal with certain types of unsecured debt, such as credit card debt. Make sure your debt settlement firm deals with the type of debt you are concerned about.

Customer Support

Look for companies with a clear and easy to understand website. Check user comments and customer reviews.


Check whether they are members of a major trade association, such as the American Fair Credit Council. Find out if all its debt specialists are certified by the International Association of Professional Debt Arbitrators (IAPDA).

Experience and Resources

Avoid new companies. Stick with firms that have at least five years under their belt. Keep away from firms that don’t have a physical address. A post office box doesn’t count.

SuperMoney’s Best Debt Settlement Companies

Here is our list of best debt settlement companies for 2018. For more information on these and other debt settlement firms, click here.

Debtmerica Relief

Debtmerica ReliefDebtmerica Relief is based in Santa Ana, California. It has been in business since 2006 and helped more than 20,000 clients.

Most debt settlement firms are big on promises but short on details. We love Debtmerica’s transparency when explaining the pros and cons of debt settlement programs and other debt relief strategies. Its website does a particularly good job of setting realistic expectations for its debt settlement program.

Debtmerica customers typically obtain a 45% to 60% reduction of their enrolled debt. The average fee is 21% of the debt balance. It will consider customers with as little as $10,000 in debt.

Accreditation: Debtmerica is a member of the American Fair Credit Council (AFCC), and all its consultants are certified by the International Association of Professional Debt Arbitrators (IAPDA). It has an A+ rating with the BBB.

Accredited Debt Relief

accredited-debt-reliefAccredited Debt Relief is based in San Diego, California, and was founded in 2008.

Fees range between 18% and 25% of the total debt balance enrolled.

Accredited Debt Relief has a flexible monthly payments program and offers a wide selection of debt relief services, such as credit counseling, debt management, and debt consolidation.

Accreditation: Accredited Debt Relief is a member of the American Fair Credit Council (AFCC), and its debt specialists are certified by the International Association of Professional Debt Arbitrators (IAPDA).

Looking for more options? Would you like to read consumer reviews on debt settlement companies before you commit to a debt settlement program? Click here for consumer and expert reviews on dozens of debt settlement firms.

Not sure if debt settlement is right for you? Get a free initial consultation with a debt specialist who can help you understand your options.

what is debt settlement

Credit card debt is a major financial problem in the United States. Unfortunately, many consumers are not receiving the help they need and deserve because of a misunderstanding of how debt settlement works. Others are jumping into a debt settlement when there are other options available that are less damaging to their credit.

Don’t allow baseless debt settlement myths to limit your debt relief options.

Get a Free Consultation

Nobody/Everybody qualifies for a debt settlement

This is a tricky one because both variations of the myth are misleading and damaging to borrowers.

True. Not everyone is going to qualify for a credit card debt settlement. And even those who qualify for a debt settlement may not receive the pennies on the dollar reductions they would like. However, that doesn’t mean you can’t qualify for a substantial debt reduction. Get a free consultation with a professional debt settlement firms and ask whether a debt settlement is a good option for you. Debt relief experts can help you determine whether your financial situation qualifies you for a debt settlement.

These statistics illustrate the benefits of debt settlement programs. They are part of a 2015 study commissioned by the American Fair Credit Council that analyzed the outcomes of over 1.9 million consumer accounts enrolled in debt settlement programs between January 1, 2006, and March 31, 2015 (source).

  • The average settlement of an account enrolled in a debt settlement program is 48% of the balance owed.
  • Over half the consumer that enroll in a debt settlement program settle accounts within the first four months.
  • Debt reduction consistently saved consumers between $2.75 and $3.13 for every $1 paid in fees over the life of a debt settlement program.

As you can see, there are many credit card users that are entitled to a fair debt settlement.

Only poor people apply for debt settlements

Credit card debt is a problem for all consumers but particularly for middle-class borrowers. After all, middle-class borrowers are more likely to have a credit card. Typically, they also have larger lines of credit than consumers in lower income brackets. Federal regulations restrict credit card issuers from increasing the credit limit of an account unless they can determine the consumer has the income or assets to make minimum payments (source). According to the latest survey of consumer finances by the Federal Reserve, the average debt burden among members of the middle class — those with earnings within the middle three-fifths of the total population — is 122 percent of their annual income (source).

Negotiating for a debt settlement is unethical

Banks and credit card companies like to portray debt settlements as an unethical debt relief tool that shows a lack of character. That is unfair. Of course, there are people who use credit irresponsibly or even fraudulently, but most people who negotiate a debt settlement have fallen into difficult times because of circumstances outside of their control, such as medical bills, family problems, and unemployment.

If you are looking for someone to blame – and there is plenty of blame to go around – the credit industry and the legislative branch have a lot to answer for. There is a reason credit card use, and, therefore, debt exploded in the 1980s. Spoiler alert. It wasn’t the simply irresistible fashion industry. A 1978 ruling by the Supreme Court ended customer interest rate limits and the federal usury law. The deregulation of the industry allowed lenders to charge high interest rates and penalty fees that turned credit cards into cash cows for banks. Now, only nonprofit credit unions have an interest rate ceiling of 15 percent.

Debt consolidation loans, credit counseling, and debt settlements are all the same

The three main debt relief options for people with large debt problems: credit counseling, debt consolidation, and debt settlements. They are completely different from each other. They all have their pros and cons. A debt relief expert can help you determine which option is best for your financial circumstances.

Here is a brief summary of the pros and cons of each one:

  • Credit counseling will probably protect your credit score, but you may end up extending the term of your loan and paying more in interest. Plus, its success rate is extremely low. Most people drop out before the debt is repaid.
  • Debt consolidations require borrowers to either have excellent credit or to secure the loan with a home or another valuable asset. This method can reduce your monthly payments and protect your credit. However, it can also be expensive, take years to repay, and can put your home at risk.
  • Debt settlement will have a negative effect on your credit and won’t necessarily stop collection actions while you’re enrolled in the program. However, it gives borrowers who can only afford minimum payments to get out of debt faster and save money on interest and fees.

Credit reports show the unpaid balance on debt settlements

You may have heard that delinquent accounts show on your credit report for up to 7 years. This is true. The credit report also shows the balance you owe, for lenders, employers, and landlords to see. The same CANNOT be said about debt settlements.

If a creditor agrees to a debt settlement, you no longer owe the remaining or “forgiven” balance. That is, after all, the whole point of a debt settlement: to provide people with overwhelming debt a clean slate. When lenders report the debt settlement to credit bureaus, the debt balance goes down to zero. Creditors may add a note along the lines of “settled for less than full balance.” Even the content of this note is up for negotiation during the settlement. Although there are no guarantees, you can request your creditor to omit it as part of your debt settlement negotiation.

Warning: There is a scenario where this myth does prove to be true. If as part of your debt settlement you agree to be liable for the deficiency balance, you will owe the difference between the full balance and the amount you pay as part of the offer in compromise. You should never agree to this. No reputable debt settlement company will ever allow you to agree to this. It is usually a trick debt collectors and unscrupulous creditors pull on people who negotiate their own debt settlement.

What should you do next?

Now you can debunk some of the worst debt settlement myths, find out what a debt settlement can do for you. Debt settlements are a powerful debt relief tool, but they are not a silver bullet for every financial problem.

If you are facing overwhelming debt and you can barely afford to make minimum payments on unsecured debts, such as credit card debt, medical bills, and personal loans, a debt settlement program may be a smart move for you.

First, read this guide on 10 questions you should ask a debt settlement company before you commit to a debt settlement program.

Once you’re ready, click here to get a free consultation with a debt relief expert. Educating yourself about your debt relief options won’t cost you a dime or hurt your credit score.

Get a Free Consultation

Wages Garnished? Here’s What to Do Next

Before your wages are garnished, several things must’ve happened. One, you should’ve received numerous notices in the mail from your creditors. Two, phone calls from debt collectors must’ve reached the extreme until finally, they stopped.

Related article: 8 Important Things Debt Collection Agents Don’t Want You to Know

So, having your wages garnished should not come as a complete surprise. But that doesn’t mean that you won’t be shocked when a wage garnishment actually happens.

If your wages have been garnished, you naturally wonder if there is anything you can do to release the hold on your income. You may worry that you’ll lose your job. While your worries are understandable, in many cases they are unfounded. In fact, you may be able to have a garnishment removed altogether.

What Is Wage Garnishment?

Wage Garnishment

Wage garnishment involves the seizure of a part of your paycheck before you even see any money (Nolo). In that respect, wage garnishment works like taxes. The difference is that wage garnishment serves as punishment for failure to meet a financial obligation.

In most cases, creditors must get a court order to garnish your wages. This is true for so-called unsecured debt such as credit cards. By the way, the nature of secured credit almost always prevents your wages from ever being garnished.

But for income tax debt, child support and other priority debts, creditors don’t need a court order to garnish your wages. But if you owe money on your taxes or for child support, you already know this in advance. If you make no effort to pay these kinds of financial obligations, you should not be surprised if your wages are garnished.

How Much Can Be Taken from My Paycheck?

Paycheck Garnished

The immediate effect of a wage garnishment is reduction in your take-home pay. How much of a reduction depends on how much you owe, the nature of your financial obligation and your income.

In all cases, wage garnishments can only be taken from what is known as disposable income – basically, your take-home pay. It is also possible to have many wage garnishments imposed against you. But even with multiple wage garnishments, you will never be deprived of your entire paycheck.

Wage garnishments for child support orders are among the harshest. They can be imposed without a court order through what is known as an administrative wage garnishment.

Wage Garnishment SnipIf you are supporting another family already, garnishments are generally limited to 50 percent of your disposable income. If you are single with no other dependents, garnishments for child support can extract up to 60 percent of your disposable income. If you’re more than 12 weeks behind on your payments, another 5 percent can be added to the wage garnishment.

Owe back taxes to the IRS or to your state or local government? Tread lightly. Garnishment amounts vary depending on your filing status, number of dependents and how much you owe. If you owe both federal and state taxes, you may be garnished by both agencies.

Falling behind on federal student loan payments can also leave you vulnerable to administrative wage garnishment. The amount of garnishment is limited to 15 percent of your disposable income or the amount of your disposable income that exceeds 30 times the federal minimum wage, whichever is less. Private student lenders must generally seek a court order to garnish your wages.

Can I Lose My Job?

Lose a Job

Federal law prohibits your employer from firing you on the basis of a single wage garnishment. But if more than one creditor imposes a wage garnishment or if a single creditor imposes multiple garnishments, federal protection no longer applies.

State laws protecting workers against dismissal because of wage garnishment may be stricter than those of the federal government, protecting workers that have up to 3 wage garnishments attached to their paychecks. (Department of Labor)

How Do Wage Assignments Differ from Wage Garnishments?

Wage Garnishment 2

Wage assignments allow creditors to collect overdue payments directly from your wages without obtaining a court order. But unlike wage garnishments, you must agree to wage assignments in advance, although such agreements are frequently hidden in the fine print of an agreement. Federal law and many state laws prohibit wage assignments in most consumer contracts.

But if your contract allows you to revoke your authorization for wage assignment at will, then they are generally legal. Likewise, loans that are set up with payments taken directly from your paycheck also usually allow wage assignments. (Nolo)

Why Has My Bank Account Been Frozen?

Credit Freeze

If you are not gainfully employed, nonsecured creditors may get a court order to freeze your bank account.

But thanks to a federal law passed in 2011, exempted funds such as Social Security and disability payments that are direct deposited into your bank account are automatically tagged and cannot be garnished.

Some states such as New York also protect a total of $2,500 in bank accounts that contain exempt funds from being frozen, even if exempt funds are only a fraction of this amount. This protection does not apply to garnishments for child support payments or back taxes, and your bank account may be frozen without a court order to collect such garnishments.

Can I Get Rid of Wage Garnishment?


One certain way to get rid of a wage garnishment is by bringing your account to a current status. In most cases, that means paying off your debt in full. Some creditors may agree to a payment plan, especially if you offer to pay at least as much as the amount being deducted from your paycheck under the garnishment.

You may also file either a federal or state claim of exemption with the court. Under a claim of exemption, you must demonstrate that the garnishment prevents you from covering your basic living expenses. Be prepared to provide evidence of your income and your expenses. (Nolo)

Likewise, you may file an appeal to have the garnishment overturned. If your bank account has been frozen, you may petition to have the freeze lifted if the funds in your account are exempt funds or if the amount of money in your bank account falls under specified asset limits.

If your income tax status is head of household and you provide at least 50 percent support for a child or other eligible dependent, you may shield most or all of your income from wage garnishment. Your state’s laws may provide stronger protections against wage garnishments for heads of household. Though, you may need to file a head of household exemption to obtain that protection.

How Does Bankruptcy Affect Wage Garnishments?


Filing Chapter 7 or Chapter 13 bankruptcy also protects your bank account and wages from wage garnishment through the automatic stay provision. If a garnishment is already in place, filing for bankruptcy immediately releases the garnishment. You may need to inform your creditors individually to have garnishments lifted before notification is made, generally by mail. (Nolo)

Bankruptcy does not provide protection against garnishments for child support or alimony. If your bankruptcy is dismissed, the protection provided from the automatic stay disappears. But creditors would no longer be able to make any collection efforts against debts discharged by a bankruptcy, including most credit card debts. Any wage garnishments would be voided by the discharge as well. (CreditCards)

Can I Prevent Wage Garnishment?

Money in Pocket

The best way to deal with wage garnishment is to prevent it from happening in the first place. The IRS is often willing to negotiate payment agreements that allow you to avoid it altogether.

If you have previously maintained a good payment record, other creditors will also often work with you to restore your account to current status without resorting to wage garnishment.


If your nerves are in tatters from screening calls and your thumb is sore from hitting ignore on your cell phone, it’s time to pull your head out of the sand. Get familiar with your rights when it comes to debt collection.

Chances are you have more options than you might expect regarding your debt situation. Collection agents bank on the fact that you may not be familiar with the Fair Debt Collection Practices Act (FDCPA) and the Fair Credit Billing Act (FCBA), which were created to protect consumers in debt.

Educate yourself on what collection agents can and can’t do, and you’ll find those pesky phone calls a lot less bothersome.

1. No Down Payment Required

money-puzzle Debt collectors can earn a hefty commission from collecting from you—generally 30 to 50 percent if they’ve reached their monthly quota.

For that reason, they’ll often insist on receiving a large payment to get repayment started or to prevent collection fees from growing. No need to fall for these tactics. Just pay what you can.

2. Payment Deadlines Are Non-Existent

Past due notice You’re already late on your payments—that’s why debt collectors are calling you. Creating a sense of urgency by insisting on some mythical deadline is an attempt to get you worried enough to pay up as soon as possible. Collection agents are hedging their bets with this tactic. They know that the longer lead time they give you, the less likely you are to pay.

3. You Don’t Have to Answer the Calls

Phone Call You can ignore debt collectors if you want. No law requires that you work with them or answer their phone calls. And if you request that they stop contacting you via written letter or inform them that an attorney is handling your debt, they must immediately refrain from contacting you. And by law, collectors can only contact you between 8 am and 9 pm.

4. Consequences Are Often Exaggerated

Angry Man debt Collector Avoid falling for the hype when a debt collector tells you that your credit score is going to suffer (it most likely already has), or they’re going to seize your belongings (illegal in some states). The only thing they can do is demand that you pay—but you don’t have to comply.

5. Personal Financial Information Isn’t Required

Security concept: Lock on digital screen If a debt collector tries to get information from you such as your bank account numbers, employment background and your social security number, flat out refuse to divulge the information.

Such personal financial facts aren’t required, and giving them out can be dangerous at worst and make the collection efforts more annoying at best.

Related article: 10 Early Signs That Your Identity Might’ve Been Stolen

Personal financial information can help debt collectors find you if you move or change your number or sue you for repayment. When they have your bank account and social security number, they can discover your bank account balances. So when you tell them you’re broke and they mention the $500 you have in your account, you’ll find yourself explaining how the money is earmarked for other bills.

6. Crossing State Lines Is Prohibited

Step over the line Debt collectors don’t want you to know that if a company has sued you for repayment and won, but you are in a different state, they can’t legally force you to pay. Transferring the judgment for repayment to another state is often not financially feasible for them.

7. Wage Garnishments Have Limits

Wage Garnishment If a debt collector warns that your wages could all be garnished, they’re lying.

“For ordinary garnishments (i.e., those not for support, bankruptcy, or any state or federal tax), the weekly amount may not exceed the lesser of two figures: 25 percent of the employee’s disposable earnings, or the amount by which an employee’s disposable earnings are greater than 30 times the federal minimum wage (currently $7.25 an hour).” – U.S. Department of Labor

For instance, if you live in California, where the minimum wage is $9 and you make $300 a week, then only $30 could be garnished from your paycheck each week. You also have the option to show that garnishment would cause you and your family financial hardship.

8. Student Loan Repayment Options Exist

student-loan-debt Thanks to the 1992 Higher Education Act, you have the right to show financial hardship and set up an affordable repayment plan with the collection agency that can be as low as $10 a month to repay student loans. Once you successfully pay nine out of 10 payments on time, the Department of Education takes over your student loans once again. Knowledge truly is power when it comes to debt collection.

By keeping these consumer rights in mind, you’ll find yourself being more assertive with debt collectors and immune to their high pressure tactics, which means you’re better able to make the right decisions for your financial situation.