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If you’re behind on your debt payments and beginning to feel overwhelmed by their impact on your financial life, considering debt settlement may be an opportunity to get back on track. National Debt Relief is one of many debt settlement companies that have helped hundreds of thousands of consumers alleviate the burden of debt by negotiating lower balances on their behalf.
National Debt Relief
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Cost
15% to 25% of enrolled debt
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Highlights
National Debt Relief has been in business since 2009, and has helped hundreds of thousands of people get out of debt. While National Debt Relief won’t be a fit for people who owe less than $10,000, it can be a good option for those with large debts.
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App available
Pros
- A+ Better Business Bureau rating
Cons
- A minimum of $10,000 of unsecured debt is required to enroll
- Not available in all states
Using any debt settlement service can lead to some serious consequences for your credit score, so read on to make sure you know what you’re getting into before signing up.
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How does National Debt Relief work?
National Debt Relief’s debt settlement service negotiates with your creditors to reduce the total amount you must pay back. If successful, this service could potentially save you thousands of dollars.
According to Natalia Brown, National Debt Relief’s Chief Compliance and Consumer Affairs Officer, here’s how it works:
- As a potential client, you call and receive a free consultation with one of NDR’s certified debt specialists. During this call, the debt specialist will review your debt relief options. NDR will also conduct a soft credit inquiry and give you a quote on how much NDR’s services will cost, as well as an estimate of how much money you can save by using NDR.
- If you want to move forward, you then submit an application. NDR’s underwriters will confirm your debt problems are a good fit for the service and enroll you in the program.
- You then start depositing payments into an FDIC-insured savings account NDR opens at a third-party bank (you retain full control over the account). Based on the schedule you worked out with NDR, you make these payments monthly, semi-monthly or bi-weekly.
- NDR will then start to negotiate with your creditors one at a time. The first settlement offer usually comes around 4 to 6 months after enrollment in the program.
National Debt Relief only works with unsecured debt, like credit cards, personal loans, medical bills and private student loans. This is normal across the board for private debt relief companies. National Debt Relief can also settle debts for collections, repossessions and business debt.
To be eligible for National Debt Relief’s service, you must have at least $7,500 in debt and be several months behind on your payments. The company claims its customers save an average of 46% of their enrolled debt, before paying the company’s fee. The program duration ranges from 24 to 48 months.
Don’t forget taxes
According to the Internal Revenue Service (IRS), canceled, forgiven or discharged debt is considered taxable income. So if you settle with your creditors, don’t be surprised if you receive a Form 1099-C from your creditors so you can report the canceled amount as income.
If you’d prefer debt consolidation instead of debt settlement, NDR will refer you to Reach Financial, a personal loan lender.
How much does National Debt Relief cost?
National Debt Relief charges a fee for its debt settlement service that ranges from 15% to 25% of the debt you’re asking for help with. If you enroll $20,000 of debt in the service (for example), your fees could range from $3,000 to $5,000.
National Debt Relief: Pros and cons
Before signing up for a debt settlement service, always consider the benefits and downsides.
Pros
- A+ rating from the Better Business Bureau (BBB)
- You don’t pay National Debt Relief if there is no settlement offer, the settlement offer is not approved by the client and the creditor doesn’t receive at least one settlement payment
- Offers free consultation
Cons
- Program is not available in Oregon, Vermont and West Virginia, according to National Debt Relief
- You must have at least $7,500 in unsecured debt to qualify
- Fee is based on the total enrolled debt, not the negotiated amount
Keep in mind that if you use a debt settlement company, you’ll have to stop making payments to your creditors while the company negotiates on your behalf. Unfortunately, stopping payments — even while you’re in the negotiation phase — will negatively impact your credit score. According to the Consumer Finance Protection Bureau, your creditors can continue to charge late fees and interest on stopped payments. In some cases, they may even sue you. Make sure you weigh these risks before going with a debt settlement company.
How does National Debt Relief compare?
National Debt Relief vs. Americor
National Debt Relief and Americor are two popular debt settlement companies but here’s how the two compare to each other.
Americor Debt Relief
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Cost
14% to 25% of enrolled debt
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Highlights
Americor offers debt relief options for those with more than $7,500 of unsecured debt. It’s been in business for over 15 years and also offers debt consolidation options. It’s been accredited by the American Association for Debt Resolution and the BBB.
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App available
Types of debt
Both Americor and National Debt Relief work with unsecured debt. This means neither company will work with mortgage debt, auto debt or any other type of secured debt. Both companies work with personal loans, credit cards, lines of credit, medical debt, repossessions and collections.
Minimum/maximum debt
National Debt Relief: $7,500 with no limit
Americor: $7,500 with no limit
Fees
National Debt Relief: 15% to 25% of the total enrolled debt
Americor: 14% to 29% of the total enrolled debt
Americor’s fees are a bit higher than National Debt Relief’s. Americor’s fee can be as high as 29% while National Debt Relief’s maximum fee is just 25%. The actual fee you’re charged may depend on the state you live in, so it could be a good idea to get a consultation from each company and compare your offers.
National Debt Relief vs. Pacific Debt Relief
Pacific Debt Relief is another debt settlement company with similar ratings and fees. Here’s how it compares to National Debt Relief.
Pacific Debt Relief
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Cost
15% to 25% of enrolled debt
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Highlights
Pacific Debt Relief is highly rated for customer service, earning a 4.93 out of 5 according to the Better Business Bureau. Since 2002, the company has settled over $300,000,000 worth of debt.
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App available
Types of debt
Both National Debt Relief and Pacific Debt Relief service unsecured debt and work with repossessions and collections.
Minimum/maximum debt
National Debt Relief: $7,500 and no maximum limit
Pacific Debt Relief: $10,000 and no maximum limit
Fees
National Debt Relief: 15% to 25% of the total enrolled debt
Pacific Debt Relief: 15% to 25% of the total enrolled debt
National Debt Relief and Pacific Debt Relief charge the same fee range, however, Pacific Debt Relief requires a higher minimum debt balance. Pacific Debt Relief also only operates in 30 states while National Debt Relief operates in 47 plus Washington D.C.
Is National Debt Relief legit?
National Debt Relief is an accredited member of the American Fair Credit Council (AFCC). It has been around since 2009 and has helped over 600,000 individuals get out of debt. It also has an A+ rating from the BBB (Better Business Bureau).
Does National Debt Relief hurt your credit?
When working with any debt settlement company, it’s normal to see a decline in your credit score at first.
Payment history makes up 35% of your FICO score so when you aren’t making payments, your credit score will drop. And since debt settlement companies require you to stop making payments to your creditors, you can expect to see a change in your score.
Keep in mind that in order to work with National Debt Relief, you need to already be behind on your payments by several months. So by the time you decide to work with a debt settlement company, your credit score is likely already dropping.
Over time, though, your credit score will improve again as you make payments toward your settled balance.
How to sign up with National Debt Relief
To get started with National Debt Relief, you can submit their online form or call (888) 626-1806. You’ll receive a free consultation to help you consider your options.
Frequently Asked Questions (FAQs)
FAQs
Who qualifies for debt settlement?
Debt settlement programs are ideal for those who are having difficulty paying back existing debts. However, debt settlement companies may have their own requirements for the minimum amount of debt you need in order to qualify for their programs.
What’s the difference between debt settlement and debt consolidation?
Debt consolidation is the process of taking on a new loan to pay off existing balances. Debt settlement involves a settlement company negotiating a lower balance on your behalf. You’ll be responsible for paying back this new, settled balance.
What’s the difference between debt settlement and debt management?
Debt settlement is meant to help you negotiate a lower balance than what you started with. Debt management services help you pay off the full borrowed amount.
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Bottom line
National Debt Relief stands out as a slightly more affordable debt settlement company with lower minimum balance requirements compared to some competitors. However, just make sure you consult with their experts so they can assess your situation and help you make a comfortable decision.
Why trust CNBC Select?
At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every review is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of debt settlement products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics.
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Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
