How Credit Associates' debt relief program compares to alternatives
If you're struggling with high credit card or personal loan balances, debt relief programs can provide a lifeline. But not all debt relief services are created equal.
Choosing the wrong provider could leave you in a bigger financial mess.
In this review, we'll compare one of the fastest growing debt relief companies—Credit Associates—to alternatives like National Debt Relief and Freedom Debt Relief.
Read on to learn which program may be the best fit based on your situation and savings goals.
An in-depth look at Credit Associates
Founded in 2016 and based in Dallas, Texas, Credit Associates is a relative newcomer to the debt settlement space. But they've quickly grown to become a major player.
Credit Associates specializes in negotiating payoff discounts on unsecured debts like credit cards, personal loans, medical bills, and utility bills. Their debt specialists work on your behalf to secure settlements for 30-50% less than the balances owed.
Once enrolled, you'll stop making payments to creditors. Instead, you pay a monthly amount to an escrow account managed by Credit Associates. When the fund builds sufficiently, they'll start negotiations to settle your debts one by one.
The program length is 36 months—longer than some competitors. But this extended timeframe allows Credit Associates to ideally accrue the maximum savings.
Expect settlements to start rolling in around month 18.
What Credit Associates is best for
Credit Associates may be a smart choice if you have at least $7,500 in credit card or other unsecured debt. Their program is best suited for those who:
- Are disciplined about sticking to a monthly budget
- Can commit to 36 months of savings payments
- Need an advocate to negotiate settlements
|Accredited by the American Fair Credit Council (AFCC)
|Credit score damage from settled accounts
|A+ rating with the Better Business Bureau (BBB)
|Lengthy 36 month commitment
|Debt savings from settlements may reach 40-55%
|No guarantee on settlement outcomes
|Low monthly payments during program
|Ongoing fees even if no settlements are reached
|Customized program and monthly payment amount
|Lack of customer reviews due to newness
|Free consultation and credit counseling
In summary, Credit Associates brings experience, credibility, and customization to the table. Just beware of the credit score implications and lack of guaranteed results.
Alternatives to explore
While Credit Associates is a compelling option, it pays to explore alternatives. Here are two other top debt relief programs to consider.
National Debt Relief
With roots tracing back to 2009, National Debt Relief is among the largest and most established debt settlement services. While they provide a similar settlement program to Credit Associates, some key differences exist.
What sets National Debt Relief apart
- Focuses on faster 24-48 month resolution
- More transparent fees based on settlements
- Debt counseling and education resources
- Loan programs in addition to settlements
A notable downside is National Debt Relief's 2019 run-in with the Consumer Financial Protection Bureau (CFPB).
The CFPB cited issues with misleading claims and charging illegal upfront fees. While concerning, National Debt Relief has since revised its practices.
Freedom Debt Relief
Another long-time player founded in 2002, Freedom Debt Relief, faced CFPB allegations in 2019. But they too remain an industry leader in negotiating credit card debt reductions.
What sets Freedom Debt Relief apart
- Expertise with credit card and personal loan debt
- Large customer base across the U.S.
- Debt resolution in 24 to 48 months
- No upfront fees, payment after settlement
Freedom Debt Relief and National Debt Relief offer established reputations and breadth of experience. Just weigh their regulatory track records in your decision process.
Five things to consider before signing up for a debt settlement program
Before jumping into a debt settlement program, it's smart to understand more about how they work. Here are some key things to know:
It will likely hurt your credit score
When you stop making payments to creditors, your accounts become delinquent. This can send your credit score plummeting by 100 points or more.
Just be prepared for the hit and plan to rebuild credit after completing the program.
Results are not guaranteed
While settlements are likely, there is no guarantee how much debt will be erased. Outcomes depend on your specific creditors and balances. Be realistic about potential savings.
You still owe taxes on forgiven debt
If a creditor forgives $5,000 of your debt, that counts as $5,000 of taxable income. So debt settlement could bump you into a higher tax bracket. Factor this into your calculations.
Fees depend on your savings
Most programs charge 15-25% of your enrolled debt. But those fees come out of your settlements. And if no settlements are reached, you may owe little to nothing.
It demands commitment
To make debt settlement work, you must stick to your monthly savings for 2-3 years and avoid new debt. It's challenging but doable with focus.
While debt settlement has drawbacks, the potential savings make programs worth considering if you have a sizable credit card or unsecured debt. Just go in informed to make the best choice for your financial situation.
Choosing the right program for you
As you narrow down relief options, keep these tips in mind:
The bottom line? Do your homework to unearth the best debt relief fit. While not a magic wand, these programs can provide a lifeline to overcome debt burdens.
With consistent payments and negotiated settlements, you can restore your financial footing for the future.
So don't lose hope if debt feels overwhelming. Relief and a fresh start are within reach with the right program choice.