More than $850 million in debt resolved and counting
Accredited, nationwide
support in all 50 states
support in all 50 states
Over half a million Americans
helped since 2013
helped since 2013
Debt.com is dedicated to helping you understand debt relief solutions like debt settlement with full transparency. Below are the answers to the most common questions that we receive about debt settlement and how Debt.com works. If you still have questions, click the Get Help Now button and we’ll be happy to provide any information you need.
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No. Debt.com is a debt relief referral service. We do not provide any financial services directly. Instead, we maintain a network of accredited service providers, including nationally-accredited debt settlement companies.
When you contact Debt.com, we will evaluate your debt and take time to understand your situation. Then based on your needs and goals, if debt settlement is the best option, we will connect you with an accredited company that is licensed to provide debt settlement services in yourstate. Once you have been referred, we will check in to make sure you received the help you needed.
There are several ways that debt settlement can proceed, depending on your financial situation.
Debt settlement companies can negotiate lump-sum settlements if you have funds available for settlement offers to be made. If so, your debt settlement company will contact the creditor or collector to negotiate a settlement percentage. Once an acceptable percentage is reached, they will work with the creditor or collector to draft up a settlement agreement. After both parties have signed the agreement, the debt settlement company will work with you to disburse the funds to the creditor or collector, who will discharge the remaining balance on your account.
If you don’t have funds available to make settlement offers, the debt settlement company will help you set up a “trust” account where you will deposit funds. They help you set a budget, so you can set aside funds to generate the money needed for settlement offers. Once you have enough funds generated, they will begin making offers, following the procedure above.
This also depends on your situation. If you have funds available—from a tax refund, home sale, or other sources—then the debt settlement company can get started immediately.
If you do not have funds immediately available, then the time the process takes will depend on how quickly you can generate funds for settlement offers. According to data from the American Fair Credit Council, the average client settles their first account within six months.
Most clients who need to generate funds complete their settlement program within 24 to 48 months. Keep in mind that your debt settlement company will work with you to set up a plan that settles your debt as quickly as possible in a way that works for your budget.
Become debt-free in 24-48 months
Settle debt for 48%, on average
Settle credit cards, medical bills, payday loans, collections
Avoid bankruptcy
First, it’s important to note that federal law prohibits companies from charging fees until the service has been performed. But you should be fully informed about fees before you start working with a debt settlement company.
The companies that Debt.com will connect you with will explain their fees during your initial free consultation. In general, you will end up paying a percentage of the original debt owed on each settlement. Fees may also be regulated by the state where you live.
The percentage of the original debt owed may be as high as 20-25% in some states, however, keep in mind that the average client settles for around 48% of what they owe. The result is a net savings of 30%, according to the American Fair Credit Council.
Once the debt settlement company negotiates the settlement on your behalf, the fees will be paid or withdrawn from your trust account.
There is no federal law requiring debt settlement companies to certify their employees. However, national debt settlement trade associations, such as the American Fair Credit Council require companies to certify their debt resolution team members. Employees must learn a set curriculum, receive extensive training, and pass a certification test.
Debt.com only works with companies that follow these certification standards. So, if you connect with a debt settlement company through Debt.com, you will work with a certified debt resolution team.
Debt settlement will negatively impact your credit. Each debt settled will be noted on your credit report for seven years from the date the account originally became delinquent. Negative information in your credit report will also decrease your credit score. The damage can be more significant if your credit score is high. Lower scores will see less of an impact.
Bear in mind that accounts that are already delinquent, charged-off, or collection accounts already count as negative items in your credit report and those negative notations remain for seven years. Thus, if you are already behind on your accounts or facing charge-offs and collections, your credit is already being negatively affected by your debt.
Debt settlement companies primarily deal with credit cards and other unsecured debts, such as personal and payday loans. They can also help you settle debts that have been sold to a third-party collector, such as medical bills and utility bills in collections.
You cannot settle debts that are backed by collateral, such as mortgages and auto loans. Federal student loans cannot be settled, although some private student loans may be able to be settled.
Debt settlement is the only debt solution besides bankruptcy that allows you to get out of debt for less than you owe. However, in bankruptcy, the court decides what percentage of each debt you can reasonably afford to pay. With debt settlement, a team of negotiators works to get you the lowest settlement percentage possible.
In addition, bankruptcy can negatively impact debts that you’ve maintained in good standing, including things like your mortgage and auto loans. With debt settlement, you only settle the problem debts that you want to settle.
Other solutions, such as debt management programs and debt consolidation loans will repay the full amount you owe. You will also generally pay interest charges. While these solutions don’t negatively affect your credit, they cost more and can take longer than debt settlement. Debt consolidation also requires you to have good credit to qualify, however that is not the case with a debt management program.
Debt settlement companies generally require you to have a minimum total debt of $10,000 to enroll in a debt settlement program. Some companies have a maximum debt amount of $100,000. However, some companies work with larger volumes of debt above $100,000.
When you contact Debt.com, we will connect you with a company that works with the debt amount that you have. If you owe less than $10,000, then we can also help you connect with other solutions that can help you.
As mentioned above, debt settlement can work in a few ways. Most people don’t have funds available to settle all the debts they need to eliminate. So, they enroll in a debt settlement program. This video explains how that program works:
If you're facing challenges with debt, collections, and constant financial stress, it's time to find a solution. Let Debt.com connect you with the right company to help you. You'll receive a free, no-obligation debt evaluation from a certified debt resolution specialist. Once you see what they can do for you, you can decide if debt settlement is right for you.
DISCLAIMER - Debt.com does not provide direct debt adjustment services, but, upon request, acts as a locator service for BBB registered companies. It is ultimately up to you to determine whether the companies that we may introduce you to are appropriate for your situation. For debt consolidation programs, where permissible by law, companies may charge a one-time enrollment fee typically from $25 up to $75 for account establishment and for debt relief proposals submitted on your behalf to each of your creditors. Monthly program administration fees will vary from $5 but no greater than $75 depending on your state of residence and/or the number of creditors who agree to accept proposals and become enrolled in the program. Fees subject to change if permissible by law. For debt settlement programs, by law, you may not be charged any fee until a debt settlement is arranged on your behalf, you approve the settlement, and at least one payment is made towards the settlement. Each program offered by independent financial service providers is unique so ask them for their complete details of the program and fees.
Not all consumers are able to complete debt relief programs for various reasons, including their ability to save sufficient funds. The use of debt resolution services could negatively impact your credit and may result in legal action on the part of creditors or collectors for unpaid balances. Consumers enrolled in debt consolidation programs who fail to adhere to the terms of their debt management plan (DMP) may forfeit the benefits of debt relief and revert to the terms of their original creditor agreements. Read and understand all program materials prior to enrollment. Please contact a debt relief specialist for complete program details.
Your debt relief analysis and savings estimate is free, will not affect your credit, and you are under no obligation to enroll in, or purchase, any product or service.