How Debt Settlement Works
Debt settlement is a strategy where you (or a settlement company on your behalf) negotiate with creditors to accept less than the full balance you owe. It works best for people who are 6+ months behind on payments and owe at least $5,000 in unsecured debt — credit cards, medical bills, personal loans, store cards, or collections.
Is Debt Settlement Right for You?
Debt settlement is best for people facing real financial hardship — job loss, medical bills, divorce, or reduced income — and who can no longer keep up with minimum payments. If you're current on payments and have decent credit, a consolidation loan or balance transfer may be a better fit. Our specialists will help you compare options.
Frequently Asked Questions
How much does debt settlement cost?
Reputable debt settlement companies charge no upfront fees. Fees are only collected when a settlement is reached and you approve it, typically 15-25% of the debt amount.
Will debt settlement hurt my credit?
Debt settlement can negatively impact your credit score in the short term but is often less damaging than bankruptcy. Many people see their score recover within 1-2 years.
How long does the program take?
Most debt settlement programs take 24-48 months to complete, depending on how much you owe and how quickly you can fund the program.
What types of debt qualify?
Unsecured debts including credit cards, medical bills, personal loans, store cards, and collections. Secured debts (mortgages, auto loans) and federal student loans typically do not qualify.