In 2022, American consumers had a total of $16.38 trillion in debt, a 7% increase from the year before. If debt makes you stressed out and worried about making ends meet, one option is working with a debt settlement company like Accredited Debt Relief. Keep reading to learn more about debt settlement and determine if it’s a good option.
What Is Accredited Debt Relief?
Established in 2011, Accredited Debt Relief is a company dedicated to helping consumers get the debt relief they need to improve their financial circumstances. Since it opened, Accredited Debt Relief has resolved more than $2 billion in debt and enrolled approximately 300,000 clients in its programs. One of the most popular options is debt settlement, which means negotiating with creditors to reduce your balances.
This approach doesn’t work for secured debt or debt that’s backed by some kind of collateral. For example, mortgages are backed by real estate. If you don’t pay your mortgage as agreed, the lender could foreclose on the property, sell it and use the proceeds to cover your balance. Unsecured debt isn’t backed by collateral, so creditors have little recourse when it comes to collecting past-due balances. They can send you to collections, write off the debt or sue you, but many would rather accept whatever amount of money you offer.
Accredited Debt Relief works with the following types of accounts:
- Credit cards
- Payday loans
- Personal loans
- Overdue medical bills
Unlike some companies in the financial industry, ADR has an excellent reputation. It’s accredited by the Better Business Bureau and the American Fair Credit Council, indicating that the company has high standards. Accredited Debt Relief also has an overall rating of 4.9 out of 5 on Trustpilot.
How Accredited Debt Relief Programs Work
When you decide to sign up for debt settlement, you stop paying your creditors and start putting aside money every month. Accredited Debt Relief uses this money to settle your debts. If you determine debt settlement is a good option, you’ll work with a debt resolution specialist to determine how much money you need to put aside. Your debt resolution specialist will also let you know what to expect regarding program length and potential savings. It typically takes 12 to 48 months for a consumer to complete one of ADR’s debt settlement programs.
Advantages of Working with Accredited Debt Relief
Accredited Debt Relief doesn’t charge fees for enrolling in its debt settlement programs. That means you owe nothing upfront for the company’s services. In fact, you only pay a fee if ADR settles one of your debts. This can save you a significant amount of money as you work to clean up your financial situation. Accredited Debt Relief also provides plenty of information to help you make an informed decision. Before you enroll, you’ll find out exactly how the process works, making it easy to make an informed decision.
You’ll also have the opportunity to speak with a knowledgeable consultant before you commit to using the company’s services. The consultant can answer your questions and help you determine if debt settlement is the right approach for your financial situation.
Disadvantages of Working with Accredited Debt Relief
The main disadvantage of working with Accredited Debt Relief is that you have to pay a fee for each debt settled. ADR charges anywhere from 15% to 25%, which may be higher than the interest rates on some of your accounts. That said, many consumers don’t mind paying the fee if it helps them get out from under the weight of their past-due balances.
Accredited Debt Relief vs. Freedom Debt Relief
Although Freedom Debt Relief has been in business for about 9 years longer than Accredited Debt Relief, its reputation isn’t quite as good. For example, its average rating on Trustpilot is just 4.6 compared to ADR’s 4.9. Freedom Debt Relief also had to settle a lawsuit with the Consumer Financial Protection Bureau over claims that it tried to charge upfront fees and didn’t give customers enough information to help them make an informed decision. Finally, it usually takes at least 24 months for clients to finish one of Freedom Debt Relief’s debt settlement programs. Therefore, Accredited Debt Relief is a better option for most consumers.
Advantages of Debt Settlement
One of the core benefits of debt settlement is that it helps you pay off your debt faster. If you pay $400 monthly on balances totaling $20,000, it will take you 50 months — just over 4 years — to pay it off. And that’s assuming your creditors aren’t adding interest to your balances every month. If you settle for a total of $10,000, you can pay off your debt in half the time.
Debt settlement may also help you avoid bankruptcy and collections. Although bankruptcy doesn’t affect your credit forever, its effects can last a lifetime. For example, if you need a security clearance for your job, having bankruptcy on your record may increase the amount of time it takes the investigating agency to complete the process. If you have debt in collections, your phone may start ringing off the hook with calls from collection agencies. Debt settlement helps you avoid these problems.
If you have unsecured debt, a settlement program may even help you avoid being sued by your creditors. A creditor doesn’t have to accept your settlement offer, but many of them do because it’s less expensive than paying a law firm to sue you on their behalf.
Disadvantages of Debt Settlement
Every time you settle a debt, the creditor reports it as “settled for less than the amount owed.” This has a negative impact on your credit score, which may make it more challenging to qualify for a loan, mortgage or credit card in the future. Debt settlement may also affect your tax situation. This is because the IRS views forgiven debt as a form of income. If you settle a $5,000 debt for $3,000, for example, you may have to pay income tax on the $2,000 difference. Consult a CPA or tax preparer for more information about how debt settlement affects your taxes.
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