Is accredited debt relief worth it?
Yes. Accredited Debt Relief is a legitimate company helping struggling individuals and families reduce the amount of unsecured debt they owe. The company has an A+ rating with the BBB and thousands of positive customer reviews online.
Yes, Accredited Debt Relief is a legitimate debt relief company. It's been in business for more than a decade, it's accredited by the AADR and certified by the IAPDA, and it has overwhelmingly positive reviews from past clients.
Cons of debt settlement
Creditors are not legally required to settle for less than you owe. Stopping payments on your bills (as most debt relief companies suggest) will damage your credit score. Debt settlement companies can charge fees. If over $600 is settled, the IRS will view this debt as a taxable income.
Debt relief services may have a negative impact on your credit score, but that impact may not be as big as you think — and in some cases, it can help your credit. How these services impact your credit depends on the debt relief option you choose.
Debt relief plans can help make your payments more manageable, but they're not right for everyone. It's important for you to understand how each plan or program works and how debt relief can affect your finances.
Debt Settlement: 30 Days or More
Late payments remain on credit reports for seven years before being removed. Payment history makes up about 35% of your FICO Score.
As with most other negative credit report entries, settled accounts stay on your credit reports for seven years.
Paying off your credit card, whether it's with a debt consolidation loan or not, does not actually cancel the card. While it does bring your balance down to zero, the card will still be open and active.
While it's highly unlikely that any credit card company will forgive 100% of your debt without it being part of a bankruptcy, you may be able to negotiate a settlement with your lenders in which they forgive a percentage of the balance you owe.
Debt settlement can eliminate outstanding obligations, but it can negatively impact your credit score. Stronger credit scores may be more significantly impacted by a debt settlement. The best type of debt to settle is a single large obligation that is one to three years past due.
Can I buy a house after debt settlement?
Yes, you can buy a home after debt settlement. You'll just have to meet the lender's requirements to qualify for a mortgage. Unfortunately, that could be harder after you settle debt.
Yes, your scores are likely to drop after you settle the debt, but you can start working to increase your credit scores right away. If you're not sure where to start, a nonprofit credit counselor can help you explore options, including a debt management plan.
Bankruptcy is your best option for getting rid of debt without paying.
Company | Forbes Advisor Rating | Best For |
---|---|---|
Pacific Debt Relief | 4.1 | Best for Established Track Record |
Accredited Debt Relief | 4.0 | Best for Quick Resolution |
Money Management International | 4.0 | Best Nonprofit for Debt Relief Help |
CuraDebt | 3.9 | Best for Negotiating Tax Debt |
You can't make any new charges on your existing accounts or get new credit cards until you complete the program. But you can get out of debt faster with total payments that are up to 50 percent less. It's also important to note that your credit counselors will help you set up a new budget when you enroll.
Freedom Debt Relief has an A+ rating with the Better Business Bureau. Freedom Debt Relief is accredited by the American Fair Credit Council and the International Association of Professional Debt Arbitrators. The Consumer Financial Protection Bureau received 120 complaints in 2022 about Freedom Debt Relief.
If the mortgage is not paid, the creditor can take your house. If you have other types of debt, your home is usually safe. If you own a home and stop paying your mortgage, the creditor can file a foreclosure action and force a sale of your home.
Debt relief companies are for-profit businesses that charge you to negotiate with your creditors (the lenders you owe money) on your behalf. Their goal is to get creditors to accept less than the full amount you owe in exchange for settling the debt.
Once your credit card balance is zero, you can still use it as long as you don't close the account. But if having it open will tempt you to rack up more charges, then closing it may be beneficial.
Most debt over $600 that's forgiven is considered taxable income and you'll need to report it on your annual taxes. Debt consolidation allows you to continue using your accounts once you pay them off. That's not the case with debt settlement since the lender will close the settled accounts.
How bad does freedom debt relief affect your credit?
According to data from Freedom Debt Relief, your credit score is likely to drop substantially during the first few months of your debt relief program. But after that first six months, credit scores trend higher.
Credit card companies rarely forgive your entire debt. But you might be able to settle the debt for less and get a portion forgiven. Most credit card companies won't provide forgiveness for all of your credit card debt. But they will occasionally accept a smaller amount to settle the balance due and forgive the rest.
Completion rates vary between companies depending upon a number of factors, including client qualification requirements, quality of client services and the ability to meet client expectations regarding final settlement of their debts. Completion rates range from 35% to 60%, with the average around 45% to 50%.
Original creditors usually expect higher settlements, around 50% to 75% of the total balance, particularly for lump sum payments. Payment plans are an option but often result in paying more over time. It's important to propose a realistic plan based on your budget, without overcommitting to an amount you cannot afford.
While the effects of bankruptcy hang around for 7 to 10 years on your credit report, that's not how long you must wait to borrow money. The impact of the penalty decreases each year, and it's even possible to get a car loan within six months of your discharge.
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