Debt Settlement

Why you should choose Take Charge America and Debt Management plans over the Debt Settlement option

Risks of Debt Settlement

Debt settlement may sound appealing, but it often comes with serious consequences:

High Fees

You could end up paying large amounts to the settlement company.

Tax Surprises

Forgiven debt may be taxable, leading to unexpected tax bills.

Credit Score Damage

Missing payments can drastically lower your credit score—making it harder to rent, get a loan, or even find a job.

Hidden Costs

Any savings may be offset by long-term financial harm.

Debt Management vs Debt Settlement

When choosing the best debt repayment solution for you, it’s important to think about your long-term financial goals, rather than what’s most convenient in the near future.

A debt management plan can reduce the length of time it takes to repay credit card debt and lower the total amount of interest paid. Participants receive ongoing education to develop effective spending habits, budget to meet living expenses, manage debt and save for the future. The following chart offers a side-by-side comparison of the two options.

Debt Management

Seeking credit counseling assistance will not hurt your FICO score
Make a single monthly payment to the debt management company that they will distribute to your creditors on the plan
Nonprofit agency works with creditors on your behalf to lower credit card fees and interest rates
Cancel debt management plan anytime without penalty. But you still would owe creditors any remaining balances
Modest fees regulated by state law
No more collection calls
No potential tax implications

Debt Settlement

Stop credit card payments for 2-4 years before debts are settled and make payments into a dedicated bank account instead
No reduction in interest rates or fees, which are added to your debt
Cancellation fees vary. You still would owe creditors any remaining balances
Debt settlement severely impacts your credit score and will take time to rebuild
Fees usually run 18-25% of your total debt
Collection calls do not stop
Potential taxes on any forgiven debt amounts
Creditors may begin collections or sue you for non-payment
No guarantee the creditors will accept a settlement offer

Frequently Asked Questions About Debt Settlement

Debt settlement is not a quick-fix solution. The entire process can take up to 36 months or more before all accounts are settled. During that time, creditors can continue to contact you for payment, up to and including suing for non-payment on debts.

Because debt settlement companies advise consumers to stop making payments and purposely fall behind with creditors, the debt settlement process can have a drastic impact on your credit score. Payment history makes up the largest percentage (35%) of your credit score and delinquencies stay on your credit report for up to 7 years, which means debt settlement will have a severe effect on your credit score.

Yes. You may end up responsible for paying taxes on any forgiven debt amounts, which can run anywhere from a few hundred dollars to a few thousand dollars.

No. Debt settlement is offered by for-profit companies. By law, debt settlement companies cannot charge upfront fees. But they will charge a percentage of the amount of enrolled debt, generally between 18% and 25%. Depending on the size of your debts, that could translate into several thousand dollars in fees.

If you’re overwhelmed by debt, there are several alternatives to debt settlement that may be a better fit for your situation.

Some alternatives include:

Negotiating with creditors yourself

Debt management plans

Declaring bankruptcy

If you are unsure which is the best path forward, consider a free and confidential credit counseling session. We will review your finances and situation to determine the best course of action.

Start Your Free Credit Counseling Session

You can regain control of your money and peace of mind.

Available online 24/7
Save your progress & return later
Easy process with clear instructions
Download credit report summary

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866-528-0588

EACH YEAR, Thousands Trust TCA to Eliminate Credit Card Debt and Regain Financial Freedom

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Empowering Millions to Achieve Financial Freedom

Customer service is impeccable “Customer service is impeccable. I love everyone who works there — I couldn't have done it without your help, patience, and overall kindness. I wouldn’t want to go through a journey like this without your support. It's good to know there are still people who truly care. Thank you from the bottom of my heart. Keep up the awesome work you do. God bless you all — I feel truly blessed to have had your help.”

Monica

“One of the most important reasons TCA was so successful for me comes down to three things: The company is staffed with real professionals who understand debt management and provide honest guidance, advice, and encouragement — always with your best interest at heart. They recognize that life can throw curveballs and respond with support and understanding, not judgment. They truly care and genuinely want you to succeed!”

William

Grateful “I’m truly grateful for this program — it gave me peace of mind. The staff is knowledgeable and ready to help. My experience has been great, and I recommend this company for your debt management needs.”

Georgina

From beginning to the end ,I had a… “From beginning to end, I had a great experience with them. Great customer service — they took the time to explain everything to me and answer all my questions. I’m so happy I was recommended to you guys; that’s why I recommend all my friends who need to join.”

Claudia