Accredited Debt Relief for Debt Settlement: 2024 Review
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Accredited Debt Relief is a debt settlement company that negotiates on behalf of consumers to lower how much debt they owe to their creditors.
Consumers who complete Accredited Debt Relief’s debt settlement program reduce their monthly payments by 40% or more, according to the company. This is likely before taking into account fees paid to Accredited, which will lower the total amount saved.
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Debt settlement is risky. There’s no guarantee of success, and it can seriously damage your credit. Before opting into debt settlement, NerdWallet recommends first exploring other ways to get out of debt, like enrolling in a debt management plan or applying for a debt consolidation loan.
» MORE: What is debt settlement?
Accredited Debt Relief at a glance
Minimum debt required to enroll: | $10,000. |
Types of debt eligible for enrollment: | Unsecured debt, including credit cards, personal loans, collection accounts, medical debt and private student loans. |
Settlement fee: | Undisclosed. |
Account fees: | Undisclosed. |
How long it may take: | Two to four years. |
How much you may save: | 40% of enrolled debt (likely before fees). |
Availability: | Not available in: DE, HI, IA, MD, NH, ND, OR, RI, VT, WA, WY. |
How does Accredited Debt Relief work?
Accredited Debt Relief works by negotiating with your creditors to settle your debts for less than you owe. It specializes in settling larger debts, starting at $10,000.
Once you enroll in Accredited’s debt settlement program — which the company may call “consolidation” — you’ll be instructed to stop making payments toward your debts and open an FDIC-insured escrow account, which you’ll pay into instead. You own and control this account, which you can access anytime online, and Accredited works with you to determine how much to deposit into the account each month. According to Accredited, the amount will be less than the payments you’re currently making on your debts.
As the money in the account grows, Accredited will start negotiating with your creditors to get them to accept less than the amount you owe. The idea is that creditors will be motivated to accept the lower amount, rather than risk getting nothing at all.
If a creditor accepts the offer, you’ll pay the creditor from the escrow account, and the debt will be considered settled. Accredited says it takes about two to four years on average to successfully settle a customer’s enrolled debts.
How much does Accredited Debt Relief cost?
The biggest cost of debt settlement is the settlement fee. Accredited didn’t disclose its settlement fee to NerdWallet. Generally, settlement fees tend to be 20% to 25% of the total enrolled debt, though it may be as low as 15%, depending on your state of residence.
Here’s how a settlement fee works. If you enroll in debt settlement with $30,000 in credit card debt, and you’re able to settle for $15,000, you’ll pay a settlement fee of $7,500 (25% of $30,000). This is in addition to the $15,000 you pay to your creditors. Altogether you’ll pay $22,500.
A debt settlement company cannot collect a debt settlement fee until it successfully settles a debt.
Other costs to using Accredited Debt Relief include a one-time setup fee and a monthly fee for maintaining the escrow account, though these amounts weren’t disclosed to NerdWallet.
Is Accredited Debt Relief legit?
Accredited Debt Relief is a legitimate debt settlement company founded in 2011. It’s accredited by the Better Business Bureau (BBB) with an A+ rating and holds an accreditation from the American Association for Debt Resolution (AADR).
It’s important to carefully weigh the pros and cons before deciding whether to work with Accredited Debt Relief.
Free initial consultation.
Settles larger debts.
Multiple accreditations.
Risky way to get out of debt.
No guarantee of success.
Lack of transparency.
Pros of Accredited Debt Relief
Free initial consultation: Accredited Debt Relief offers a free initial consultation with one of its “consolidation specialists.” During this call, Accredited will confirm eligibility and review your financial situation, including debts you want to settle, before giving a personalized recommendation. Accredited emphasizes this is a no-obligation call.
Settles large debts: If you want to settle a large amount of debt, Accredited may be a particularly good option compared to other settlement companies. According to Accredited, though they work with debts as low as $10,000, the company specializes in settling debts of $30,000 or more and can bring that experience to creditor negotiations.
Multiple accreditations: Accredited Debt Relief holds multiple accreditations that may give customers peace of mind. In addition to its BBB and AADR accreditations, the company’s consolidation specialists are accredited through the International Association of Professional Debt Arbitrators (IAPDA), a nonprofit organization that helps both consumers and debt settlement companies assess debt relief options.
Cons of Accredited Debt Relief
A risky way to get out of debt: There are risks in working with Accredited Debt Relief, including a major hit to your credit, falling deeper into debt as you await a successful settlement negotiation and even the possibility of being sued by a creditor. Learn more about debt settlement risks lower down.
No guarantee of success: Like all debt settlement companies, Accredited Debt Relief may not be able to settle all your debts even if you follow the program perfectly. This is because not all creditors accept settlement offers.
Lack of transparency: Accredited refers to its debt settlement product as “consolidation,” which may be confusing for customers since settlement is different from consolidation. While settlement can clear your debts for less than you owe, consolidation involves paying back the full amount you owe — ideally under a lower interest rate — with the help of a consolidation loan, balance-transfer card or debt management plan. Financial experts widely consider debt consolidation to be a safer option than debt settlement, especially considering the differing effects on your credit score. Unlike settlement, consolidation can help build your score, as long as you make payments on time and stay out of debt in the future.
Based on the individual’s financial situation, Accredited may refer customers to a partner that offers debt consolidation loans, the company says.
Accredited also didn’t disclose fee amounts to NerdWallet, including its settlement fee and account fees. These amounts are not available on Accredited’s website, either, meaning potential customers will likely have to call Accredited to verify fees. Other large debt settlement companies disclose their fee amounts online.
How to qualify for Accredited Debt Relief
Accredited Debt Relief works with consumers who have at least $10,000 in unsecured debt from credit cards, personal loans, collection accounts, medical debt and private student loans.
Accredited Debt Relief doesn’t settle secured debts, meaning any debt tied to collateral, like an auto loan or mortgage. It also doesn’t settle federal student loans.
Accredited says its typical client earns about $65,000 annually and carries five to seven debts totaling around $30,000.
Accredited does a soft credit pull during the application process, which won’t hurt your credit score. Accredited didn’t say whether it conducts a hard credit pull at any point during the settlement process, though this is rare among settlement companies.
Know the risks of debt settlement
It’s important to understand the overall risks of debt settlement before deciding whether to work with Accredited Debt Relief.
Organizations like the Consumer Financial Protection Bureau and the Federal Trade Commission urge consumers interested in debt settlement to consider these risks:
It will hurt your credit: Because you’re required to stop making payments on enrolled debts, those accounts will be marked delinquent on your credit reports. Your credit score will take a significant hit, especially if you weren’t already delinquent on those accounts. Delinquencies and settled accounts stay on your credit reports for seven years.
Interest and fees continue to accrue: Until you enter a settlement agreement, you’ll accrue additional interest and late fees on your debt. If you don't stick with the program to completion, or if the debt settlement company can't negotiate a settlement, you may end up with an overall higher balance.
You may still hear from creditors or debt collectors: There’s no guarantee your creditors will want to work with a debt settlement company, and you may be contacted by debt collectors or sued by creditors during the process.
Forgiven debt may be considered taxable income: Forgiven debts over $600 may be counted as income on your taxes. Creditors may send a 1099-C form to you in the mail and to the IRS. One exception is if you are insolvent (your liabilities exceed your total assets) at the time the company settles with your creditors.
Accredited Debt Relief vs National Debt Relief
Accredited Debt Relief and National Debt Relief are two large debt relief companies that offer similar debt settlement programs. Both companies help you settle unsecured debts for less than you owe and project the same average time frame of two to four years. Both companies also offer a free initial phone call to go over your debt relief options, which may include traditional debt consolidation loans.
While Accredited Debt Relief specializes in larger debts starting at $10,000, National Debt Relief has a minimum requirement of $7,500, so it may be a better fit if you have a smaller debt load. National Debt Relief is also available in more states.
Alternatives to hiring a debt settlement company
Do-it-yourself debt settlement
Though it may seem easier to have a third party, like a debt settlement company, intervene on your behalf, you could have just as much success calling your creditors and negotiating with them yourself — and you’ll save thousands by not having to pay a settlement fee. Same as with using a debt settlement company, success isn't guaranteed, but if you owe only a few creditors, it’s worth a try.
Debt management plan
With a debt management plan, you’ll work with a nonprofit credit counseling agency to consolidate your debts into one monthly payment, while also reducing the interest rate. This is a good option for consumers with credit card debt who have a steady income to repay the debt within three to five years. Unlike debt settlement, a debt management plan should help build your credit score.
» MORE: What is a debt management plan?
Debt consolidation loan
By taking out a debt consolidation loan, you can pay off multiple debts at once, so you’re left with only one payment on your new loan. These loans are available to borrowers across the credit spectrum, and you can often pre-qualify with online lenders to see your rates with a soft credit check. A debt consolidation loan should have a lower interest rate than your current debts, which saves money and helps you get out of debt faster.
Bankruptcy
Bankruptcy lets you resolve your debt under protection from a federal court. Chapter 7 bankruptcy, the most common form, erases most unsecured debts in three to six months. It’ll also stop calls from collectors and prevent lawsuits against you. Like with debt settlement, your credit will suffer, so consult a bankruptcy attorney first.
