Best Debt Relief Companies: Finding the Right Solution for You

Imagine a life without debt. Without debt, your financial future has greater possibilities. You’d be free to focus on your goals. You could set your sights on the things that matter to you, like buying your forever home, traveling the world, starting a business, retiring early, or sending your children to college.

That freedom is what people are looking for when they explore debt relief options. But how do the different debt relief options work? With so many companies and programs promising to help, how do you choose the best debt relief company for you?

Here, we’ll dive into the most popular debt relief options, including debt settlement, debt consolidation, and credit counseling. We’ll show you how each method works. We’ll also discuss the best candidates for each method and help you avoid scams by showing you the red flags to avoid. It’s easier to make an informed decision once you have all the details.

Understanding Debt Relief and Your Options

The more you know about debt relief, the better prepared you are to choose a company that fits your needs. Here's what you need to know.

What does a debt relief company do?

The way a debt relief company works depends on what kind of relief they offer.  

• Every debt relief company is different. No two debt relief companies are identical, even if they provide similar services. Some companies provide counseling and coaching, or help you restructure your debt payments. Others negotiate with your creditors for debt forgiveness. Still others help you through the bankruptcy process.

• Not a one-size-fits-all solution. Debt relief can take various forms, including debt forgiveness, debt consolidation loans, debt management plans, and even bankruptcy. Choosing the solution that will work best for you depends on how much you owe, your income, and your financial goals.

Types of Debt Relief and Who They Help

Your goal should be to select a company that provides the necessary services to meet your personal goals. That’s why it’s important to understand exactly what each type of provider can do. This table offers a bird's-eye view of different types of debt relief.

Comparing the Best Debt Relief Options 

Understanding how each debt relief method works is the first step in making the right decision for you. 

DIY debt settlement

• What it is. Do-It-Yourself (DIY) debt settlement involves you contacting your creditors on your own to negotiate an agreement. The goal is to clear the debt for less than the full amount you owe, with the creditor agreeing to forgive the rest.  

Debt settlement only works for unsecured debts like credit cards, medical bills, payday loans, and unsecured personal loans. It’s not an option for secured loans like car loans or mortgages.

• Who it's best for. DIY debt settlement is best for those who are self-motivated and won't be shy about calling creditors to explain the situation. You’ll probably have to call multiple times before you reach an agreement. Prepare for your creditors to play hardball. They’re not in business to lose money, and they are under no obligation to cut you a break. 

• Impact on credit. Even if they agree to reduce your debt, creditors have the right to report that your account was settled for less than owed. That’s better than a collection account but not as good as “paid as agreed.” Settled accounts stay on your credit history for seven years. Also, if you miss debt payments because you’re saving up money for settlement offers, that will also cause credit score damage. Late payments stay on your credit history for seven years.

• How much it costs. There's no fee associated with negotiating on your own.

Debt settlement program

• What it is. When you enter a debt settlement program, the company negotiates with your creditors to reduce the total debt you owe. The goal is to settle your unsecured debts (credit cards, medical bills, and so on) for less than the full amount you owe.  

You’ll need money to offer your creditors. The debt settlement company will set up a program account where you can make affordable monthly deposits. The monthly deposit amount could be lower than the total of all the minimum monthly payments you were making. Most people choose to stop making regular monthly payments to their creditors so they can afford to build up funds for making settlement offers. 

Once there's enough money in the account, the debt settlement company makes an offer to one of your creditors for an amount that’s less than what you owe. If they agree, the agreement is presented to you for your approval. If you approve, the creditor is paid from your program account. Then, the debt settlement company’s fee is also paid from your program account. 

• Who it's best for. Professional debt settlement could be an option to consider if you intended to repay your debts but genuinely can’t. You’ll need to be able to show that you’re experiencing a financial hardship. It’s a good option if you aren’t comfortable negotiating on your own. Also, a reputable debt settlement company might be able to get better results than you could get on your own, especially if they already have relationships with your creditors.

• Impact on credit. If you stop paying your creditors, expect a negative impact on your credit. Late payments and delinquencies stay on your credit report for seven years, but their impact lessens during that time. Once you settle a debt, it’ll be reported on your credit history as “settled,” which is better than a collection account but not as favorable as “paid as agreed.” Settled accounts also remain on your credit history for seven years.

• How much it costs. There may be a monthly maintenance fee for the program account, similar to what many banks charge for checking accounts. For debt settlement services, each program has its own fee structure. Typical fees range from 15% to 25% of the debt enrolled in the program. For example, if you enroll $15,000 worth of debt, you can expect to pay a fee of $2,250 to $4,200. Some debt settlement providers charge a flat fee. 

You shouldn’t face a situation where the negotiated settlement amount and the professional debt settlement fee add up to more than the original debt. Freedom Debt Relief offers a Program Guarantee to help prevent that. We’ll refund fees if your settlement and fees are more than the amount you originally owed when you enrolled in the program.* 

Under federal law, a professional debt settlement company can't charge you an upfront fee for services. They may only take their fee after an agreement is reached with your creditor, you approve it, and at least one payment is made. The law doesn’t apply to the program account monthly fee (that fee is charged by the partner bank).

Debt management plan 

• What it is. In a debt management plan (DMP), you're paired with a trained credit counselor who will assess your situation and work with you to create a structured repayment plan designed to fully repay your unsecured debts in three to five years. 

The counselor may negotiate with creditors to waive fees or lower interest rates. You make a single monthly payment to the agency. The agency will then distribute funds to your creditors. Typically, you’ll have to agree not to use credit cards while you’re in the program. Your creditors might monitor your credit report to make sure you’re sticking to that agreement.

• Who it's best for. A DMP might be a good option if you can afford to fully pay off your debts and you’re willing to take a break from credit cards. These programs can also be a good fit for anyone who believes they would benefit from professional financial counseling. 

• Impact on credit. If you have to close credit card accounts that still have a balance, expect some credit score damage until you pay off those closed accounts. On the other hand, your creditors might agree to report your late accounts as current (a process called “re-aging”). Re-aging could have a positive impact on your score. 

• How much it costs. Nonprofit credit counseling agencies are funded by credit card companies, so the cost to the consumer is low. The average one-time set-up fee for a DMP is $38, while the average monthly fee is $27.  

DIY debt reduction

• What it is: A DIY debt reduction method is a repayment plan you design and implement yourself. In short, you create a budget that prioritizes getting debt paid off. For example, you might adopt the debt snowball or debt avalanche payment method to laser focus on paying down your balances. Or you could devise a different plan, like paying a little more than the minimum payment and then using your annual raise or bonus to make a more significant dent in the debt once a year. 

• Who it's best for. DIY debt reduction is a good fit for a person who's highly motivated to climb out of debt and confident in their ability to create and stick with a repayment plan. 

• Impact on credit. The impact on credit depends entirely on whether you're behind on payments when you begin and if you make at least a minimum payment each month. It's possible to get through a DIY debt reduction plan with a higher credit score than when you began. 

• How much it costs. There's no outside cost associated with a DIY debt reduction plan. 

Debt consolidation loan

• What it is. A debt consolidation loan is a new loan that you use to pay off more than one smaller debt. Ideally, this new loan will have a lower interest rate than the debts you're consolidating. It usually doesn’t make good financial sense to pay off a debt using a loan with a higher rate. 

Consolidating debt has benefits. It could be easier to manage your finances if you reduce the number of monthly payments you have to make. If you get a lower interest rate, that could help you reduce your long-term interest costs or get a lower monthly payment now. (Note that choosing lower payments for a longer loan term could increase the total amount of interest you pay.)

• Who it's best for. A debt consolidation loan could be the right choice for someone who can qualify for a new loan at an interest rate that’s lower than the average rate on their current debts. You’ll also need the self-discipline to avoid new debt on credit cards that you pay off with the consolidation loan. If you’ve struggled with impulse spending in the past, a good strategy is to close your credit card accounts as soon as you pay them off with the loan.

• Impact on credit. When you apply for the loan, your credit score could drop by a few points. This effect fades over the next 12 months. As long as you make all payments in full and on time, your credit score should benefit from a debt consolidation loan. 

Also, moving credit card debt over to an installment loan could have a positive impact on your score. That’s because high credit card debt can hurt your credit score, but installment loan debt doesn’t affect it in the same way. This benefit depends on your ability to keep your card debt low after you pay off your cards with the consolidation loan.

• How much it costs. Debt consolidation loans are installment loans, and most have lender fees. How much you'll pay depends on your credit score, the type of loan, the amount of the loan, and the lender. It's possible to get a no-fee consolidation loan but typically only if you have excellent credit.

Bankruptcy

• What it is. Bankruptcy is a legal process that allows you to eliminate or repay your debt under the protection of the bankruptcy court. The most common types of personal bankruptcy are Chapter 7 and Chapter 13. For those who qualify for Chapter 7, debt can be wiped out within months, but you might have to give up some of the things you own. Consumers filing for Chapter 13 must repay their debt in three years (low-income) or five years (otherwise). You don’t have to give up any assets in a Chapter 13 case. If you complete your payment plan, any remaining eligible balances are wiped out.

Creditors can’t choose not to participate. If you include them in your case, they must comply with the court’s directions. And so must you. If you file for Chapter 13, the court will decide how much you have to pay every month. In a Chapter 7, the court will tell you what you have to give up, if anything.

Bankruptcy can stop collection efforts, including a foreclosure on your home. Your mortgage won’t be forgiven, but the court gives you a chance to get caught up.

• Who it's best for. If your debt is mostly or all unsecured (medical bills, credit cards, unsecured personal loans), and you don’t own much or anything that the court could take, Chapter 7 bankruptcy could be the quickest way to get rid of your unsecured debt, for the lowest out-of-pocket cost.

Chapter 13 could be worth considering if you feel confident that you can repay your debts but you need the court to step in and get your creditors to back off. 

• Impact on credit. Any kind of bankruptcy is a bad mark on your credit history. Chapter 7 bankruptcy remains on your credit report for 10 years and Chapter 13 remains for seven years. As with all negative marks on your credit history, the effect lessens over time. Contrary to myth, a bankruptcy won’t make it impossible for you to get credit later. But for some things, like some mortgages, there’s a waiting period. 

• How much it costs. The filing fee for Chapter 7 is $338 in 2025. For Chapter 13, the fee is $313. Most people want an attorney to handle their bankruptcy case, which adds $1,000 to $5,000 to the total. Statistically, people who file for bankruptcy without an attorney are less successful.

The best person to help you decide whether bankruptcy is is viable option for you is a bankruptcy attorney who practices where you live.

Freedom Debt Relief is not a credit repair organization and does not provide or offer services or advice to repair, modify, or improve your credit.

How to Decide Which Debt Relief Company Is Right for You

Deciding how to handle debt is a big decision. Here are a few points worth considering as you determine your best move. 

The amount of debt you carry

Your credit score

Which options are most cost-effective? 

• DIY debt reduction and DIY debt settlement don’t cost anything in the way of fees. However, if you have concerns about your ability to negotiate a good deal with your creditors, it may be worth paying extra for the professionals at a debt settlement company to negotiate on your behalf. 

• Using a lower-interest debt consolidation loan to combine higher-interest debts could lower the long-term cost of your debt even if you must pay loan fees. Or you could get immediate relief in the form of a lower monthly payment.

• A debt management plan could lower the long-term cost of your debt if your creditors agree to lower your interest rates. But the tradeoff is usually a high monthly payment.

• If you're deeply in debt and can't see a way out, bankruptcy may be the most cost-effective option, particularly if you qualify to file for Chapter 7 protection. But you’ll need to pay filing fees, and possibly attorney fees. 

Chapter 13 bankruptcy could be the most expensive path. In addition to repaying at least the lion’s share of your debt, you’ll also pay filing fees, possibly trustee fees, and possibly attorney fees. Chapter 13 could cost you more than the amount of your debt. 

Warning Signs of Bad Debt Relief Companies

Working with a legitimate debt relief company can be a lifesaver. Unfortunately, some jump into this business with the sole goal of separating you from your money. If you spot any of the following red flags, you might be getting scammed.

You're asked to pay upfront fees

Legitimate debt relief companies don’t charge upfront fees. There’s a federal law prohibiting them from doing so. Freedom Debt Relief only charges a fee after they reach an agreement with your creditor, you approve it, and at least one payment has been made. 

The promises are too flowery

If a company claims to have a secret method of wiping out debt or if they guarantee complete debt elimination, you're probably being scammed. 

They apply high-pressure sales tactics

Legitimate debt relief companies don't pressure you to sign up before giving you time to consider your options carefully. 

You know they're exaggerating

Some scammers will tell you that signing up with them will improve your credit score immediately. Over the long term, your credit score could improve as you become more financially stable, keep debt low, and pay your bills on time. But it takes time.

They don't do their research

A legitimate debt relief program will go over your credit report with you and explain which debts they can help with. It's the only way they can honestly tell you if they can help. Scammers may ask for a few pieces of documentation, but since their goal is to collect money from you, they don't care if they can help.

Signs of a legitimate debt relief company

It's possible to find a highly experienced, well-respected debt relief company. Here's what you're looking for:

• You make initial contact with them, not the other way around

• You're never asked for upfront fees

• They're honest about what they can do for you

• The company is BBB-accredited

• You're provided with a written agreement that outlines costs and services

• You feel free to ask as many questions as you'd like, and you receive answers that make sense

• You never feel pressured to sign up

Is Debt Relief Right for You? 

If you're stuck in a cycle of overwhelming debt and missed payments, or you can’t afford more than the minimum payments that barely cover interest, debt relief might be a good fit. Most people have financial ups and downs, often through no fault of their own. Finding a path to the other side of your debt is the first step to a better financial future.

 Here are three key considerations to look for in a debt relief program:

1. It's affordable

2. Many other people have used the same method or program with success

3. Even if your credit takes a hit at first, continued participation will help you get to a place where you can build good credit naturally

If a professional debt settlement company seems like a good option, consider how long they’ve been in business and how successful they've been in helping others. For example, Freedom Debt Relief has been in operation since 2002. In that time, we’ve served more than a million clients and resolved $18B (yes, billion) in debt across more than four million accounts.** 

Some terrific debt relief companies exist, and you don't have to settle. Look for a company with a proven record of helping people like you find the freedom they seek. 

*The Freedom Debt Relief program guarantee takes effect when you graduate the program—or even if you leave before graduating. When you exit the program, we’ll use the combined total of all the debts you enrolled and settled and the fees you paid to us to calculate your eligibility for a refund.

**Statistics reflect the results of the members we and our affiliates have served since 2002 (as of January 2025).

Next steps

If you're ready to find financial freedom, Freedom Debt Relief makes it easy to start. Here's what you can expect:

• You'll chat with a Certified Debt Consultant to discuss your needs and goals. 

• Our debt experts will review your information and create custom debt options for you to review.

• You'll select the option that works best for you.

You’ll be on your way to financial freedom.