If you’re carrying large balances on your credit cards and are finding it difficult to keep up with the payments, it may be time to consider debt resolution. Debt resolution can help you negotiate with your lenders to resolve large debts for less than you owe.

Debt can take a toll on your mental health. 54% of Americans say they feel stressed due to their debt, while 66% of respondents are likely to consider bankruptcy to get out of debt. While bankruptcy may be the only viable option in some situations, there are other, less drastic measures to consider first.

What Is Debt Resolution?

Debt resolution involves negotiating with your lenders to accept less than what you owe. When your principal is reduced, it’s easier to repay it. Lenders are likely to accept this solution when they believe you can’t afford to pay them back and are at risk of eventually defaulting on your entire debt.

You can enroll in a professional debt resolution program or negotiate with lenders yourself. You’ll need to explain your financial situation to the lender and make an offer for how much you can pay. Once you reach an agreement and you pay the agreed amount, the lender forgives the remaining amount and your account will be marked as closed.  

60% of Americans say they’ve been in credit card debt for at least a year, and 19% have carried the debt for at least five years. With roughly 9.58% of disposable income going towards debt repayment, it’s easy to see why debt resolution can be an effective way to repay that debt and free up more money to build emergency savings.

Does Debt Resolution Really Work?

Is debt resolution really worth it? Debt resolution is not a one-size-fits-all solution. However, it may be the right debt relief measure if:

  • You’re consistently behind on your payments.
  • You’re unable to pay more than the minimum monthly amount.
  • You’ve maxed out your credit cards.
  • You’re receiving a lot of debt collection calls.
  • You’re constantly stressed about debt.

Debt resolution programs can help you save, on average, 54% before fees on the debt you enroll. However, you’ll need to be committed to the program. You’ll ultimately be responsible for making consistent payments and fully completing the program to benefit from the debt reduction.

Pros and Cons of Debt Resolution

Like any other debt relief option, debt resolution has its own pros and cons. It’s important to carefully consider them to ensure it’s the right option for you.


  • Debt resolution may help you avoid bankruptcy.
  • You’ll get relief from constant collection calls once you pay off your debt.
  • It can help you save around 54% before fees on your debt.
  • You’ll be able to free up more money for savings.


  • Debt resolution can lower your credit scores with all three of the credit reporting bureaus significantly, for up to seven years.
  • Creditors are not obligated to accept your proposal.
  • You’ll have to be committed to the program, and follow-through on it, to experience the full benefits.
  • You may owe taxes on forgiven debt to the IRS, which is considered taxable income.

Does Debt Resolution Affect Your Credit?

Debt resolution will lower your credit scores significantly, and the effect will be most pronounced in the beginning. However, it’s important to remember,  the amount of debt you have may have already impacted your credit score by that point, due to high credit utilization, late payment fees, or missed payments.

Once you become debt-free, you can start practicing good credit habits to rebuild your credit. We also recommend starting an emergency fund so you won’t have to rely on credit cards, payday loans, or other types of debt to deal with emergencies in the future.

Brad Reichert, debt expert and founder and managing director of Reichert Asset Management LLC, further explains how resolving debts impacts your credit. “With debt resolution, it’s important to point out that you’re not walking away from your debts, as you would if you simply stopped paying on your debts entirely,” Reichert shares. “In fact, it often looks better on your credit report to a future lender when an account is designated as “settled in full” or “paid-settled” rather than being “charged-off” or marked “sent to collections,” he adds.

According to Reichert, lenders will look at settled debts more favorably than those that were entirely written off as uncollectible because it means you made a conscious effort to meet your obligation to repay the debt as best you could at the time. “So if you can, it’s always preferable to try settling your accounts before letting them go entirely unpaid,” says Reichert.

5 Steps for a Debt Resolution Plan

You can work with a professional debt resolution consultant to create a plan for resolving your debts. When working with a debt resolution company, here are the five steps you’ll follow to get out of debt.

  1. A debt consultant will evaluate your finances and create a debt resolution plan for you.
  2. They’ll set up a separate savings account, where you can start making deposits each month to build funds to pay a pre-determined settlement amount, as per your repayment plan.
  3. The company will then negotiate with lenders to lower your debt and reach an agreement.
  4. You’ll review the settlement agreement and approve it.
  5. Pay the agreed lump sum amount to resolve your debt and complete the program.  

How To Choose a Debt Resolution Company

When looking for a debt resolution company to work with, we recommend taking advantage of the free consultation whenever available. This will allow you to learn more about the program, how it works, and what it’ll cost.

Check the reviews of the company on independent review sites like Trustpilot and ensure there aren’t any major complaints against the company on the Better Business Bureau’s (BBB) or Consumer Financial Protection Bureau’s (CFPB) websites. 

Additionally, avoid working with companies that ask for upfront payments or aren’t transparent about their services or programs since these could be scams.  It is illegal in most states for a debt settlement company to ask you to pay fees upfront–they can only require payment after they’ve shown you actual results, first.

Best Debt Resolution Companies

Start your search for the best debt resolution companies with our top three recommendations. We searched-out and reviewed ten debt resolution companies based on customer reviews, experience, eligibility requirements, and savings they offer to highlight two of the highest-recommended companies, including TurboDebt, as a comparison.

1. TurboDebt

With almost 8,000 five-star reviews on TrustPilot, TurboDebt is one of the top debt relief companies. You can qualify for the program if you have at least $10,000 in unsecured debt, such as personal loans, medical debt, and credit card debt.

Programs last for 24-48 months, and clients who successfully complete them can save as much as 54% before fees on debt enrolled.

2. National Debt Relief

National Debt Relief is one of the most well-known debt settlement companies with an A+ rating on BBB. The program they offer works for most unsecured debts, such as lines of credit, credit cards, medical bills, and personal loans.

Their debt resolution program can help you save 38% on debts. National Debt Relief also offers a free consultation that can help you decide how best you can benefit from their services.

When To Get a Lawyer

While you don’t need a lawyer in most cases if you’re working with a debt resolution company, you may need legal advice under certain other situations. You'll need legal representation if a creditor files a lawsuit against you.

If you think a debt collector is violating the law in their collection attempts, a lawyer can advise you on how to proceed. We also recommend consulting a bankruptcy attorney if you think bankruptcy may be a better solution for your debt situation.  

What To Do After Resolving Your Debt

Once you’ve successfully completed the program and have resolved your debt, we recommend focusing on rebuilding your credit profile, creating and sticking to a household budget, and practicing good credit management to avoid accumulating a lot of debt again.

Pay all your bills on time, avoid utilizing more than 35% of your available credit, and review your credit score periodically. We also recommend learning money management habits like budgeting based on your income, tracking expenses, and setting up an emergency fund.