Question 1

How It Works

Accepted Answer

Enter your total unsecured debt amount and the calculator estimates potential settlement savings based on typical negotiation outcomes. It compares the cost of continuing to make current payments versus settling for a reduced lump sum, factoring in settlement fees and the timeline to resolution.

Question 2

How much can debt settlement reduce what I owe?

Accepted Answer

Debt settlement typically resolves debts for 40-60% of the original balance, though results vary by creditor, account age, and hardship circumstances. A $20,000 debt might settle for $8,000-$12,000. Settlement companies charge fees of 15-25% of the enrolled debt, which should be factored into your total cost.

Question 3

What types of debt can be settled?

Accepted Answer

Debt settlement works primarily with unsecured debts: credit cards, medical bills, personal loans, and private student loans. Secured debts (mortgages, auto loans) and federal student loans generally cannot be settled through this process because the creditor can repossess the collateral or use federal collection tools.

Question 4

How does debt settlement affect my credit score and taxes?

Accepted Answer

Settlement typically causes a significant drop in your credit score (often 100+ points) because accounts are reported as 'settled for less than full amount.' The impact lessens over time. Additionally, forgiven debt over $600 may be reported as taxable income on a 1099-C form, so plan for potential tax liability.

Debt Settlement Savings Calculator

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Matthew Collins