Overview

• Debt relief firms have clients halt creditor payments and make monthly deposits into an FDIC-insured account while they negotiate lump-sum settlements.
• Over a typical 24- to 48-month period, creditors often agree to accept 30% to 50% less than the original balance in successful settlements.
• Firms generally charge fees of 15% to 25% of the enrolled debt and cannot guarantee settlements or outcomes.
• Participants should have at least $7,500 to $10,000 in unsecured debt and be behind or close to falling behind on payments to benefit from settlement programs.
• Consumers are advised to work with debt relief providers accredited by IAPDA or AADR and avoid companies that demand upfront fees before achieving a settlement.