Debt Settlement Fees: What to Expect
All Things Debt

Debt Settlement Fees: What to Expect

When you enroll your debt with a debt settlement program, you’ll begin saving money into a Dedicated Account every month. These funds are used to pay your creditors and cover your debt settlement program fees. Our fees are based on a percentage of your enrolled debt at the time of starting the program and range from 15%-25%. Including fees, debt settlement could reduce your total amount paid by 60% or more when compared to paying off debt by making minimum payments.

DEBT SETTLEMENT FEES ARE SUCCESS BASED

You won’t pay any fees on each of your enrolled debts until you get successful settlements. However, when you qualify for debt settlement, you also qualify for a flat-rate fee based on your enrolled debt. So you’ll know upfront exactly how much the program fees may be. Our program fees are success-based, which means you won’t pay any fees on any of your enrolled debts until we successfully reach a settlement agreement with your creditor, you agree to that settlement and make at least one payment toward the settlement. 

Fortunately, we’ve structured our deposit schedule so that it takes your fees into account. That means you won’t need to budget additional funds to cover your debt settlement fees. 

BREAKING DOWN WHERE YOUR MONEY GOES IN A DEBT SETTLEMENT

A crucial part of your debt settlement involves delaying payment to your creditors and making regular monthly deposits into a Dedicated Account. The money saved in this account will be used to pay your creditors and cover our program’s fees. 

Money in your Dedicated Account is used to:

  • Pay your creditors 
  • Pay your program fees

Fee Example: $5,000 credit card debt

Debt settlement fee (25%): $1,250

Settlement paid to creditor: $2,500

Total paid from Dedicated Account savings: $3,750

Our program may reduce what you pay compared to what you originally owed, even including fees. The amount you could save varies when you examine how much you might have paid using alternative debt relief strategies like making minimum payments or getting a debt consolidation loan.

Making Minimum Payments
The minimum payment example is based on a credit card for individuals with fair credit, having an interest rate of 23% (rounded up to the nearest percentage point) and assumes a payment of 3% of the balance. Please note that, assuming the principal balance does not increase due to additional charges, fees, and interest, the required minimum monthly payment will decrease over time as additional minimum monthly payments are made and reduce the total balance.
Debt Consolidation Loans

WHAT DO YOUR PROGRAM FEES PAY COVER?

Our fees are used to cover our services. During enrollment, we help you set up your Dedicated Account and provide budget counseling, which includes a full review of all your finances to determine a monthly deposit amount that is affordable for you. During the program, we also field all your creditor calls* and give access to a client portal so you can monitor your progress. Most importantly, we handle negotiations with your creditors and use our expertise to get you a fair settlement that may save you money. 

Debt Settlement Services:

  • Expert assistance setting up your Dedicated Account
  • Financial review
  • Fielding all creditor calls**
  • All debt negotiation communications with creditors

THE BENEFITS OF DEBT SETTLEMENT

We surveyed our recently graduated clients and 99%* reported that the monthly deposit amount was one of our program’s best features. That’s because our program eliminates multiple debt payments and instead allows you to make a regular monthly deposit into a Dedicated Account. The amount of the deposit is usually much less than you were paying before. This is possible because our settlements can reduce your debt by up to 50% or more and limit the impact of ballooning interest rates. Over time high interest rates can prevent you from paying down your principal balance by prolonging your debt repayment timeline.

Benefits of debt settlement:

  • Simplifies your debt into one monthly payment
  • Lowers your monthly payment 
  • Limit the impact of ballooning interest rates
  • Reduces the amount of enrolled debt
  • Reduces the total amount paid, including fees
  • Resolves debt faster than other debt relief methods
  • Credit score impact should be less severe than bankruptcy

GET MORE OUT OF YOUR MONEY

Debt Settlement empowers you to take control of your debt, and part of that is knowing exactly where your money is going. Before the debt settlement, your money was being eaten up by interest rates and penalty fees. With debt settlement, your money goes directly toward paying down your debt and pays for essential services that may help you move toward a future beyond debt.  

Contact a Certified Debt Specialist to find out if debt settlement is right for you. 

Learn more about more common debt settlement concerns:

*In October 2020, Accredited Debt Relief surveyed clients who had recently graduated from our debt settlement program in the past three months. The data pertaining to “recently graduated clients” cited in this blog is taken from this survey.
**The best way to limit unwanted collection calls is to inform the creditor that you are working with a debt settlement company. This alerts the creditor of your intention to settle your debt. This way they’ll know you plan to delay payment until an agreement is reached.

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