Average Settlement: 37.56%
With fees: 45.37%
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Jared Strauss

I help people settle ALL of their debts at the same time. I charge 10-15% of the savings.

Debt Settlement Companies: Information About Fees

Posted By Jared Strauss

debt settlement companies

How much do debt settlement companies charge?

As opposed to most industries, the service fees charged by debt settlement companies have a direct impact on the services they're offering.

For instance, when you hire someone to mow your lawn, the price they charge has no impact on their ability to complete the job. When you hire a debt settlement company, since your financial capacity is the key in respect to your success, the amount you pay in fees will immediately impact you.

The most critical thing for you to know is the more you pay in fees, the longer it will take you to settle your debts. And, the longer it takes you to settle your debts, the less likely it is that you will successfully do so.

Fees commonly charged by debt settlement companies

There are 2 different methods that debt settlement companies commonly employ when charging fees. They are...

  • Debt settlement fees based on the amount of debt that you enroll
  • Debt settlement fees based on the amount that you save
debt settlement fees are too expensive

Fees that are based on the amount of debt that you enroll...

I'm personally not too crazy about this method of charging fees. It doesn't promote performance and the service fee is static, irrespective of the outcome.

This fee structure is usually the most expensive, generally 20-25% of the total debt that you enroll. This fee is usually almost triple what I charge.

debt settlement fees based on savings

Fees that are based on the amount that you save...

I'm a huge supporter of this fee model, as it is the one I use for my debt settlement program. When debt settlement fees are based on the amount that is saved, you have the comfort of knowing that your debt settlement fee will be linked with your success.

I charge 15% of what I save you if your total enrolled debt is less than $150,000.

I charge 12% of what I save you if your total enrolled debt is between $150,000 and $299,999.

I charge 10% of what I save you if your total enrolled debt is $300,000 or more.

The difference between my fee versus 20% of what you owe is very significant.

Take a look at precisely how large the difference in fees is...

My Debt Settlement Fee

15% of what you SAVE
Typical Debt Settlement Fee

20% of what you OWE
Settle debts at 60% $1,800 $6,000
Settle debts at 50% $2,250 $6,000
Settle debts at 40% $2,700 $6,000
Settle debts at 30% $3,150 $6,000
 
Based on $30,000 in enrolled debt

Even if I average 30% settlements on your accounts, you’ll pay 47% less than a typical debt settlement fee.

debt settlement and taxes

Debt settlement fees, taxes and settlement costs

You may or may not have to pay income taxes on the amount that you save when settling your debts. The IRS grants an insolvency exemption to consumers who have a negative net-worth. This exemption will either reduce the amount of taxes that you will owe or eliminate them completely.

If your good credit is still intact and you possess a positive net-worth (meaning you will have to pay all of the taxes), you may find that after you add up the estimated cost of the settlements, debt settlement fees, and the income taxes that you may not actually end up saving enough to make debt settlement a make-sense option.

If this describes your situation, I highly recommend that you do the math and ask yourself one simple question:

Is it worth it to ruin my credit and experience the stress of debt settlement to save X?

For many people who are in this situation, they find that it is definitely not worth it.

There is a strong chance you will too.

is debt settlement right for me

Debt settlement generally makes sense when you either owe a substantial amount of money or have already fell behind.

If you possess a positive net-worth (meaning you would have to pay taxes on the settlements) and your credit hasn't suffered any damage yet, debt settlement can start to make sense if you have a high debt-load. Generally $50,000 or more.

If you're already behind on your accounts and your credit has suffered, settling your debts generally makes sense regardless of how much you owe. The damage has already been done. You might as well resolve the situation for the least cost possible.

I hope this information about the fees that are charged by debt settlement companies helps you. Please feel free to contact me with any questions.

Learn about the dangers
of debt settlement

Learn what most debt settlement companies won't tell you...

Written by Jared Strauss

I was formerly one of the most successful debt collectors in the country. And don’t worry, I wasn’t one of those huffy-puffy types.

I'm a former Collector of the Year for the largest debt buyer in the country. I also held positions of Collection Manager, Corporate Trainer, and Director of Collection Operations. I’ve worked for large third-party collection agencies, collection attorneys and large debt buyers. (full bio)

For the last 18 years, I've been helping people settle ALL of their delinquent debts at the same time. I charge 10-15% of what I save you.

I've dedicated my website to teaching you about the dangers of long-term debt settlement and when settling your debts can make sense.

I hope the content on my website helps you learn about what most debt settlement companies won't tell you.