It doesn’t matter how much debt you’re in. Trying to stay on top of it all can be overwhelming. Especially when the overdue credit card notices and threats from creditors start rolling in…
The good news is, a company called National Debt Relief could help you pay off your debt for significantly less than you owe, and in less time. No bankruptcy, no loans and no need to have good credit.
How? It offers a strategy a lot of people don’t know about, called debt relief. If you want to know how it works and if it’s right for you, our National Debt Relief review will tell you what you need to know.
What Is National Debt Relief?
It’s a debt settlement company that’s been around since 2009. It says it’s helped more than 500,000 people pay off over $5 billion in debt in that time.
But what exactly is debt settlement? It describes the process of negotiating with creditors to reduce the amount you owe. It’s something you can do yourself or have a company — like National Debt Relief — do for you. It can negotiate down unsecured debt like credit cards, personal loans and medical bills. National Debt Relief says it may also be able to help with business debt, private student loans and more. It does not work for secured debt, which is debt with collateral attached. For most people that’s their car or their home.
How Does National Debt Relief Work?
If you owe at least $7,500 in unsecured debt (credit card debt, personal loans, medical bills, etc.), National Debt Relief’s experts will create a customized plan for you. The plan usually involves you putting payments into a savings account (also called settlement fund) instead of giving them to the creditor. As the monthly payments add up, they negotiate with your creditors to reduce the amount you owe.
Because you have stopped making payments, they may see the reduced amount as better than nothing, which is how they come to an agreement. You then pay off the rest in a lump sum. On average, you could become debt-free within 24 to 48 months.
National Debt Relief also offers free consultations.
Who Is Eligible for This Program?
Those who have at least $7,500 in unsecured debt and are able to make monthly payments to the settlement fund are eligible for National Debt Relief’s program. Its website says anyone who is facing financial hardship and is struggling to keep up with high-interest unsecured debt could be a good candidate. Facing financial hardship may include job loss, divorce, loss of a family member or unexpected expenses. So, for example, it doesn’t apply to someone who very recently took out a personal loan and just wants to try to cut it down. That’s not how it works.
Also, remember that secured debt includes things like your mortgage, car loan and federal student loans. So if the majority of your debt is from those categories, you may need to think about other options.
How Much Does It Cost?
You won’t pay any upfront fees, but you’ll be charged once a settlement is reached. That could be up to 25% of the amount of the debt that you enrolled. National Debt Relief says you’ll only be charged the fee if: the creditor makes a settlement offer, you accept that offer and you’ve made at least one payment toward the settlement. So if your creditor won’t settle, you don’t pay a fee.
Another cost to factor in is taxes. You’ll get a form from your creditor if your forgiven amount is more than $600, because that forgiven debt is considered income. It could be excluded if you’re “insolvent” which means your liabilities exceed your assets. Liabilities are what you owe, assets are what you own.
Pros and Cons of Using National Debt Relief
These are some of the pros of using National Debt Relief to help you get out of debt:
- There’s no upfront cost
- How much you owe could decrease significantly
- One monthly payment structure
- It could help you avoid bankruptcy
These are some potential drawbacks to consider:
- Your credit score will likely go down because you have stopped making payments, which your creditor could also sue you for
- You may still get calls from collections
- You’re taking the chance your creditor won’t settle
- You could face a tax liability on forgiven debt
Is National Debt Relief Legit and Safe?
National Debt Relief is both legit and safe to use. It’s an accredited business with the Better Business Bureau and has an A+ rating. Its reviews on the BBB website average out to 4.74. It also has a 4.7 rating on TrustPilot.
Positive reviews say the customer service is good, agents explain the process in a way that’s easy to understand and it’s helped them pay off high-interest debt. Negative reviews say the fees can be pretty high and not paying their creditor resulted in legal action.
You should always read all the terms and consider the risks involved before signing up for anything.
How It Compares to Other Debt Relief Options
If you want to get out of debt but you’re not sure settlement is the way to go, there are other options. You could try debt consolidation, which is when you use a personal loan to pay off debts then pay back the singular loan (hopefully with a lower interest rate) to make debt more manageable. Here’s our guide on debt consolidation.
You can also look into balance transfer cards. These cards allow you to transfer existing debt to a card with a 0% APR period. So you can make a dent in your debt while getting a break on interest.
Credit counseling is usually a cheaper option because it’s often provided by a non-profit. This will get you guidance for how to manage your debt, but it won’t reduce what you owe.
Filing for bankruptcy should be a last resort. There are different types, but what it boils down to is that it either relieves you of your debt or allows you to pay it under a different plan. Although that sounds great, not all debts can be included in the filing, and there are long-lasting consequences to it. This includes loss of property and damage to your credit score. Bankruptcy also stays on your credit report between seven and 10 years. Here’s our guide on bankruptcy.
National Debt Relief Review: Should You Use National Debt Relief?
If you are struggling to make ends meet while drowning in high-interest unsecured debt and you meet the qualifications, it could be a good option for you. This is especially true if you’re trying to avoid filing for bankruptcy.
It’s important to weigh the risks, too. Although you won’t pay a fee if your creditor won’t settle, you will be behind on payments because National Debt Relief has you put those payments in the settlement fund. Your credit score will very likely drop, and if you do settle, you may pay taxes on the forgiven debt. Plus, you’re paying National Debt Relief’s fee of up to 25% of the enrolled debt.
If you can still manage your payments and aren’t experiencing financial hardship, then it could be worth it to look into other options. Ultimately, National Debt Relief is better for people in deep financial stress who have limited options.
FAQs About National Debt Relief
Will National Debt Relief hurt my credit score?
It mostly likely will, because you won’t be paying creditors, and missed payments can affect credit scores.
How long does it take to complete the program?
National Debt Relief says most people make it through the program in 24 to 48 months, but it will depend on your circumstances.
Are there any upfront fees?
You do not pay any fees up front. You will pay a fee once a settlement is reached and you make your first payment.
Is forgiven debt taxable?
Yes — if your forgiven debt is more than $600 it is generally considered taxable income by the IRS.
Will creditors always agree to a settlement?
No — a creditor agreeing to settle is not a guarantee. Take that into consideration before you agree to stop making payments to your creditor as part of the program.