Start My Answer

How Much Do Settlement Companies Charge?

Sarah Edwards | November 25, 2022

Paying a debt settlement company can feel like this ^^

Summary: Most debt settlement companies charge 15%-25% of your debt amount in exchange for their services. So, if you owe $10K, you could end up paying as much as $2,500 for the debt settlement company’s assistance. Alternatively, you can make your own offer and settle the debt by yourself by sending a Debt Lawsuit Settlement Letter.

Debt settlement is the process of offering a creditor or debt collector a percentage of the original value of an obligation in exchange for an agreement to eliminate the remaining debt. You can realize significant savings through debt settlement, often paying as little as 50% of an obligation with no further interest charges or penalties.

How does a debt settlement company work?

Debt settlement companies handle the administration and negotiation of settling debts on behalf of consumers. Generally, individuals who become customers of a debt settlement company enter an arrangement where they make monthly payments to the organization.

The debt settlement company saves the money in a special account. Once the consumer sends enough cash to settle a debt, the negotiation process begins. They’ll contact one of the customer’s creditors or debt collectors and attempt to negotiate a settlement agreement.

If the creditor or collector agrees to a settlement, the settlement agency will contact the client for approval before making the payment.

Debt settlement companies handle each creditor account individually. Eventually, the consumer obtains complete debt relief through settlements or other payment arrangements.

Most debt settlement programs last between two to five years. Following graduation from the program, consumers are usually free from debt.

Is working with a debt settlement company expensive?

It can be. Most debt settlement companies charge between 15%-25% of the overall value of a client’s debt for their services.

For instance, if the client enters $20K of debt into a debt settlement program, they may pay the company between $3K to $5K for their services.

If the debt settlement company can negotiate a debt settlement at 50% of the consumer’s original debt amount, the client will only pay $10K, saving $10K in the process.

However, the fees charged by the debt settlement company eat into the customer’s savings, so they may realize only a 25% discount after concluding the process.

If the debt settlement company isn’t as successful at negotiating a settlement, the customer may save even less—only 5% or 10% of the value of their debts.

Let’s take a look at an example.

Example: David is being sued by a debt collection agency for credit card debt of $10,000. He finds Freedom Debt Relief online and enrolls in their debt settlement program. The debt settlement company helps David reach a settlement of 60% of his debt, so he has to pay off $6,000 to the debt collectors. Freedom Debt Relief charges David a fee of 20% of his debt amount, meaning he has to pay $2,000 to them. David could have reached a settlement on his own and avoided the fees with Freedom Debt Relief, but he still saves $2,000 in the end.


Should I work with a debt settlement company to resolve my debts?

Some prefer working with a debt settlement agency. If the consumer needs help to save toward debt settlement, a debt settlement company can establish an arrangement for the customer to follow. There is no need to calculate monthly savings amounts or negotiate with creditors. The debt settlement agency handles everything for you.

However, the expense of a debt settlement company can knock out any savings you obtain. In addition, you’re giving the majority of the control to the debt settlement company. They’ll decide which creditor to pay off first.

If a debt collector tries to sue you, you’ll need to handle the lawsuit yourself. You can attempt to settle the debt before it goes to court, but you probably won’t be able to withdraw money from your account with the debt settlement company. Instead, you’ll need to come up with the funds from your savings or risk a court judgment.

Can I handle the debt settlement process myself?

Yes. If you take the time to learn about debt settlement, you can establish a savings account for debt settlement and negotiate with your creditors. You’ll save the additional expense of having someone else handle it for you, and you’ll be in a better position to fight potential lawsuits if a creditor decides to sue you.

However, debt settlement does take time, and it can be stressful. Most people try to avoid speaking with debt collectors at all costs. Attempting to negotiate with them on your own may sound like a task worse than going to the dentist for a root canal.

Be very careful if you decide to handle the debt settlement process independently. If possible, it’s best to try settling your debts via written communication. That way, you have a clear record of all conversations between you and the creditor that you can refer to if they renege on their agreement.

If you must speak with a debt collector, avoid making a settlement payment until you receive a written document from them outlining the terms of your agreement. You’ll also want to ensure that the debt collector is the proper owner of your debt. If they are not, you may lose your money and still be on the hook for the original value of your obligation.

Will debt settlement hurt my credit score?

Consumers already overdue on their debt payments have likely already seen a drop in their credit scores. If you can’t afford to keep making minimum payments and don’t see yourself getting out of debt anytime soon, debt settlement may be the right option.

Debt settlement won’t improve your credit score, but it can help you get free from creditors and debt collection agencies. Think of it this way: settling a debt for less than you originally owed won’t look great on your credit report, but paying nothing at all will look much worse.

Additionally, you can employ other strategies to improve your credit over time.

Settle your debt on your own

If you’ve been sued for a debt, you can reach a debt settlement without having to hire a debt settlement company.

Make a settlement offer by sending a Debt Lawsuit Settlement Letter to the party suing you. This will start the negotiation process. It’s best to start with a low offer so you give yourself room to accept any counteroffers.

Check out this video to learn more about how to settle a debt:

What is SoloSuit?

SoloSuit makes it easy to fight debt collectors.

You can use SoloSuit to respond to a debt lawsuit, to send letters to collectors, and even to settle a debt.

SoloSuit's Answer service is a step-by-step web-app that asks you all the necessary questions to complete your Answer. Upon completion, we'll have an attorney review your document and we'll file it for you.

Respond with SoloSuit

Get Started

>>Read the FastCompany article: Debt Lawsuits Are Complicated: This Website Makes Them Simpler To Navigate

>>Read the NPR story on SoloSuit. (We can help you in all 50 states.)

How to answer a summons for debt collection in your state

Here's a list of guides for other states.

All 50 states.



Guides on how to beat every debt collector

Being sued by a different debt collector? Were making guides on how to beat each one.


We have answers

Join our community of over 40,000 people.


You can ask your questions on the SoloSuit forum and the community will help you out. Whether you need help now are are just look for support, we're here for you.


Get Started

Win against credit card companies

Is your credit card company suing you? Learn how you can beat each one.

Going to Court for Credit Card Debt — Key Tips

How to Negotiate Credit Card Debts

How to Settle a Credit Card Debt Lawsuit — Ultimate Guide

Get answers to these FAQs

Need more info on statutes of limitations? Read our 50-state guide.

Why do debt collectors block their phone numbers?

How long do debt collectors take to respond to debt validation letters?

What are the biggest debt collector companies in the US?

Is Zombie Debt Still a Problem in 2019?

SoloSuit FAQ

If a car is repossessed, do I still owe the debt?

Is Portfolio Recovery Associates Legit?

Is There a Judgment Against Me Without my Knowledge?

Should I File Bankruptcy Before or After a Judgment?

What is a default judgment?— What do I do?

Summoned to Court for Medical Bills — What Do I Do?

What Happens If Someone Sues You and You Have No Money?

What Happens If You Never Answer Debt Collectors?

What Happens When a Debt Is Sold to a Collection Agency

What is a Stipulated Judgment?

What is the Deadline for a Defendants Answer to Avoid a Default Judgment?

Can a Judgement Creditor Take my Car?

Can I Settle a Debt After Being Served?

Can I Stop Wage Garnishment?

Can You Appeal a Default Judgement?

Do I Need a Debt Collection Defense Attorney?

Do I Need a Payday Loans Lawyer?

Do student loans go away after 7 years? — Student Loan Debt Guide

Am I Responsible for My Spouses Medical Debt?

Should I Marry Someone With Debt?

Can a Debt Collector Leave a Voicemail?

How Does Debt Assignment Work?

What Happens If a Defendant Does Not Pay a Judgment?

How Does Debt Assignment Work?

Can You Serve Someone with a Collections Lawsuit at Their Work?

What Is a Warrant in Debt?

How Many Times Can a Judgment be Renewed in Oklahoma?

Can an Eviction Be Reversed?

Does Debt Consolidation Have Risks?

What Happens If You Avoid Getting Served Court Papers?

Does Student Debt Die With You?

Can Debt Collectors Call You at Work in Texas?

How Much Do You Have to Be in Debt to File for Chapter 7?

What Is the Statute of Limitations on Debt in Washington?

How Long Does a Judgment Last?

Can Private Disability Payments Be Garnished?

Can Debt Collectors Call From Local Numbers?

Does the Fair Credit Reporting Act Work in Florida?

The Truth: Should You Never Pay a Debt Collection Agency?

Should You Communicate with a Debt Collector in Writing or by Telephone?

Do I Need a Debt Negotiator?

What Happens After a Motion for Default Is Filed?

Can a Process Server Leave a Summons Taped to My Door?

Learn More With These Additional Resources:

Need help managing your finances? Check out these resources.

How to Make a Debt Validation Letter - The Ultimate Guide

How to Make a Motion to Compel Arbitration Without an Attorney

How to Stop Wage Garnishment — Everything You Need to Know

How to File an FDCPA Complaint Against Your Debt Collector (Ultimate Guide)

Defending Yourself in Court Against a Debt Collector

Tips on you can to file an FDCPA lawsuit against a debt collection agency

Advice on how to answer a summons for debt collection.

Effective strategies for how to get back on track after a debt lawsuit

New Hampshire Statute of Limitations on Debt

Sample Cease and Desist Letter Against Debt Collectors

The Ultimate Guide to Responding to a Debt Collection Lawsuit in Utah

West Virginia Statute of Limitations on Debt

What debt collectors cannot do — FDCPA explained

Defending Yourself in Court Against Debt Collector

How to Liquidate Debt

Arkansas Statute of Limitations on Debt

Youre Drowning in Debt — Heres How to Swim

Help! Im Being Sued by My Debt Collector

How to Make a Motion to Vacate Judgment

How to Answer Summons for Debt Collection in Vermont

North Dakota Statute of Limitations on Debt

ClearPoint Debt Management Review

Indiana Statute of Limitations on Debt

Oregon Eviction Laws - What They Say

CuraDebt Debt Settlement Review

How to Write a Re-Aging Debt Letter

How to Appear in Court by Phone

How to Use the Doctrine of Unclean Hands

Debt Consolidation in Eugene, Oregon

Summoned to Court for Medical Bills? What to Do Next

How to Make a Debt Settlement Agreement

Received a 3-Day Eviction Notice? Heres What to Do

How to Answer a Lawsuit for Debt Collection

Tips for Leaving the Country With Unpaid Credit Card Debt

Kansas Statute of Limitations on Debt Collection

How to File in Small Claims Court in Iowa

How to File a Civil Answer in Kings County Supreme Court

Roseland Associates Debt Consolidation Review

How to Stop a Garnishment

Debt Eraser Review

Do Debt Collectors Ever Give Up?

Can They Garnish Your Wages for Credit Card Debt?

How Often Do Credit Card Companies Sue for Non-Payment?

How Long Does a Judgement Last?

​​How Long Before a Creditor Can Garnish Wages?

How to Beat a Bill Collector in Court

Not sued yet?

Use our Debt Validation Letter.


Out Debt Validation Letter is the best way to respond to a collection letter. Many debt collectors will simply give up after receiving it.


Let's Do It

It only takes 15 minutes.

And 50% of our customers' cases have been dismissed in the past.


"Finding yourself on the wrong side of the law unexpectedly is kinda scary. I started researching on YouTube and found SoloSuit's channel. The videos were so helpful, easy to understand and encouraging. When I reached out to SoloSuit they were on it. Very professional, impeccably prompt. Thanks for the service!" - Heather



Get Started