Executive Summary
Debt settlement firms differ widely in fees, outcomes and regulatory compliance. Table 1 shows only what each firm publishes and we could read on its own site — its fee range and minimum debt — alongside its CFPB complaint count and ACDR membership; no settlement percentage or program length is shown, because none has been read from a firm's own published disclosure. Freedom Debt Relief says it has settled more than $20 billion in debt since 2002 (the firm’s own figure); larger firms are expected to draw more raw CFPB complaints. Smaller specialists on the ACDR member list (formerly AFCC), such as Pacific Debt Relief and Accredited Debt Relief, have no CFPB company record under their names in the window we read. All firms operating legally under FTC rules must disclose all fees upfront, and may not collect a fee until at least one debt has been settled and the consumer has made at least one payment under that settlement.
What the CFPB data shows (Sep 2025 - Aug 2026, product “Debt or credit management”, read 2026-10-21): 182 complaints are filed under National Debt Relief LLC and 91 under Freedom Financial Network (Freedom Debt Relief’s parent); Accredited Debt Relief and Pacific Debt Relief have no company record under their names. Raw counts are not adjusted for company size, so they are not a ranking.
Major Firm Comparison — 2026
Data: CFPB Consumer Complaint Database (product “Debt or credit management,” Sep 2025 - Aug 2026), the ACDR member list (read 2026-09-10) and each firm's own published fee and minimum-debt pages (read 2026-09-10). No settlement percentage or program length is shown: none has been read from a firm's own published disclosure.
| Firm | ACDR member list (formerly AFCC), read 2026-09-10 | CFPB complaints, “Debt or credit management,” Sep 2025 - Aug 2026, read 2026-10-21 (raw count) | Fee, as published on the firm’s own site (2026-09-10) | Minimum debt, as published (2026-09-10) |
|---|---|---|---|---|
| Freedom Debt Relief | Listed as Achieve | 91 (filed under Freedom Financial Network) | 15%–25% of enrolled debt | Not verified |
| National Debt Relief | Listed as National Debt Relief LLC | 182 (filed under National Debt Relief LLC) | Up to 25% of enrolled debt | Not verified |
| Americor | Not checked | 55 (filed under Americor Funding, LLC) | Not verified | Not verified |
| Accredited Debt Relief | Listed | No company record under this name | 15%–25% of enrolled debt | $5,000 |
| Pacific Debt Relief | Listed | No company record under this name | Not verified | $10,000 |
| ClearOne Advantage | Not checked | 30 (filed under ClearOne Advantage, LLC) | Not verified | Not verified |
| New Era Debt Solutions | Not checked | No company record under this name | Not verified | Not verified |
| Note: CFPB complaint counts are raw counts for the named product and company record only, not adjusted for company size — never rank by this column; a firm with no CFPB company record under its name is shown as an absence, not a zero. Fee and minimum-debt values are read from each firm’s own published page; “Not verified” means we have not read a published figure from that firm. Settlement percentages, program lengths, BBB grades and founding years are not shown: no firm-published figure for them has been read and pinned. Every CFPB count and absence in this table comes from one read of the CFPB database on 2026-10-21; the CFPB adds late-filed complaints to a past window, so a later read can be slightly higher. | ||||
Disclosure: New Era Debt Solutions’ president reviews other Dreamy Leads Research pages; he did not review this page and supplied no data for it.
State-by-State Debt Settlement Law Summary
The FTC's Telemarketing Sales Rule (TSR) applies nationally and bans advance fees. State rules differ widely: some cap fees and some restrict the business outright. Rows for California, Texas, New York, Illinois, Georgia and Arizona were removed on Sept. 17, 2026 because the fee caps and regulators previously shown could not be matched to a statute; they return once each is re-checked. Data: FTC Telemarketing Sales Rule and the state statutes cited in the table.
| State | License Required? | Fee Cap | Advance Fee Banned? | Regulator |
|---|---|---|---|---|
| All states (federal) | — | No percentage cap; a fee may be charged only after at least one debt is settled and the customer has made at least one payment under that settlement (16 CFR 310.4(a)(5)(i)) | Yes | FTC |
| Florida | Not verified | For “debt management services,” defined to include adjusting, compromising or discharging unsecured debt: no more than $50 for setup or initial consultation, then no more than the lesser of 15% of the monthly payment or $75 a month (Fla. Stat. 817.801–817.802) | Yes (federal rule) | Fla. Stat. ch. 817 |
| North Carolina | No license available — debt adjusting, including settlement services that charge fees before the settlement is complete, is a Class 2 misdemeanor (G.S. 14-423, 14-424) | Not applicable | Yes | Criminal statute |
What the CFPB Complaint Data Tells Us
The CFPB Consumer Complaint Database is the most accessible public data source on debt settlement firm performance. Key caveats for interpreting complaint counts:
- Scale adjustment is essential. Freedom Debt Relief's complaint count reflects its position as one of the market's largest providers — it says it has settled more than $20 billion in debt since 2002. A firm with 10× more clients will naturally have 10× more complaints. Per-client complaint rate would be a far better metric, but the firms do not publish client counts, so it cannot be computed here.
- Complaint categories matter. Common categories: "false statements or representation," "communication tactics," and "fee disputes." Fee disputes at settlement time are the most common issue across all providers — consumers sometimes dispute the fee calculation method.
- CFPB enforcement actions are the red flag. Freedom Debt Relief settled a 2019 CFPB enforcement action for charging fees before settlement in some cases and for misrepresentations to consumers. National Debt Relief has not been subject to CFPB enforcement action as of 2026.
Total Cost of Debt Settlement: A Worked Example
A hypothetical consumer with $30,000 in unsecured credit card debt enrolls in a 36-month program at a 20% fee (illustrative inputs, not any firm's published terms):
- Monthly escrow deposit: ~$583/month for 36 months = ~$21,000 total deposited (the settlement plus the fee below)
- Settlement amount (50%): $15,000 paid to creditors
- Fee (20% of $30,000 enrolled): $6,000
- Total paid: $21,000 vs. $30,000 original debt = $9,000 savings
- Tax liability: The forgiven $15,000 is taxable income (IRS Form 1099-C), potentially adding $3,000–$5,000 in federal taxes if not insolvent
- Net savings after taxes: $4,000–$6,000 — before accounting for credit damage and collection activity during the program
Practitioner view
The consequence people underestimate is the tax bill. When a creditor forgives part of a balance, that forgiven amount is generally treated as income to you, and the creditor may issue a Form 1099-C reporting it. So someone can settle a large balance, feel relieved in the spring, and owe the IRS in the fall without having set anything aside. There are exclusions, and being insolvent at the time of the forgiveness is the most common one, but it has to be claimed and documented on the return. It is not automatic, and most people do not know to ask. … Ask any program what your tax picture looks like the year after it works. If they cannot answer that, they have not finished the math.
Quoted via a Connectively expert request; quote confirmed with the source September 11, 2026. Views are the source's own.
Debt settlement makes the most financial sense for consumers who are already delinquent on debts (credit damage has already started), have exhausted budget options, and face debts they cannot realistically pay in full within 5 years.
When Debt Settlement Is and Isn't Appropriate
Debt settlement is typically appropriate for:
- Unsecured debt at or above a firm’s published minimum (Table 1: $5,000 at Accredited Debt Relief, $10,000 at Pacific Debt Relief) — credit cards, medical bills, personal loans; not student loans, auto loans, or mortgages
- Already delinquent or on the verge of delinquency
- Unable to pay minimum payments on current income/budget
- Bankruptcy is not a viable option due to income, assets, or future borrowing needs
Debt settlement is typically not appropriate for:
- Consumers who are current on payments and have income to manage debt — creditors are unlikely to settle current accounts
- Debt below a firm’s published minimum (Table 1) — on a small balance the fee takes a large share of any savings
- Secured debt (mortgage, auto loan) — settlement is not applicable
- Federal student loans — income-driven repayment or forgiveness programs are better options
- Anyone who cannot sustain monthly escrow deposits for the years the FTC warns a program can take
Frequently Asked Questions
What is the CFPB complaint database and how do I use it?
The CFPB Consumer Complaint Database is a public dataset of complaints submitted to the Consumer Financial Protection Bureau against financial companies. You can search by company name at consumerfinance.gov/data-research/consumer-complaints. When comparing debt relief companies, filter by the product Debt or credit management (the product Table 1 uses) and by the company name. Larger companies are expected to draw more raw complaints, and the firms do not publish client counts, so a per-client rate cannot be computed: raw counts are not a ranking.
Which debt settlement company has the best success rate?
None of the firms in Table 1 has a settlement percentage we could read from its own published disclosures, so this page shows none. Settlement percentage alone would not be the right metric anyway — the fee structure, your specific creditor mix, and program length matter as much as any headline rate. Request specific outcome data for your debt type and state before enrolling.
How much does debt settlement cost?
Under the FTC Telemarketing Sales Rule the fee must be a share of the debt resolved or a percentage of the amount saved (16 CFR 310.4(a)(5)); the firms in Table 1 publish their own. Under FTC Telemarketing Sales Rule, companies cannot collect fees until they settle at least one debt and you have made at least one payment toward that settlement. Any company requesting upfront fees before settlement is violating federal law.
What is the CFPB complaint database?
The CFPB Consumer Complaint Database at consumerfinance.gov/data-research/consumer-complaints is a public record of all complaints submitted to the CFPB against financial companies, including responses from companies. Search by company name and filter for the Debt or credit management product. Raw counts are not adjusted for company size, so they are not a ranking.
Is debt settlement legal?
Debt settlement is regulated nationally by the FTC Telemarketing Sales Rule, and some states go further: North Carolina makes debt adjusting, including settlement services that charge fees before the settlement is complete, a misdemeanor (G.S. 14-423, 14-424). The FTC bans advance fees, requires written disclosures of all terms, and mandates that companies must settle at least one account before charging any fee. State licensing rules and fee caps differ; Table 2 lists the statutes checked so far.
How does debt settlement affect my credit score?
Debt settlement causes significant credit score damage. To settle, you must stop paying creditors — accounts become delinquent and are reported to credit bureaus. Each settled account is marked "settled for less than full amount" — a negative entry that remains for 7 years. The FTC warns that your credit report and score are likely to be damaged during the program. Settled accounts can be reported for up to seven years (15 U.S.C. § 1681c); on-time payments on your other accounts help you rebuild.
Related research & tools
Sources
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