Debt Relief Calculator

How much can I save through debt settlement?

By working with a debt settlement or consolidation company, you can save considerably. Enter your current debts into our loan calculator to start creating a plan to eliminate your debt.

Using this debt relief calculator

By working with a debt relief company, you may be able to save money on your debt. This handy calculator can be your first step toward eliminating your debt by allowing you to see your options for debt settlement, a form of debt relief.

  1. Start by entering each of your outstanding debts. Click “Add a Loan” on the left-hand side. You’ll be asked to submit the loan type and your debt amount. Once this information is entered, select “Add Loan.”
  2. Repeat this step for each of your debts.
  3. Once complete, click “Calculate Savings.” The calculator will estimate a range of how much money you can save and generate a month and year for when you could be debt-free.

You can select “Compare Debt Relief Providers” to see debt relief providers, their user reviews, and offerings.

As an example, let’s assume that in June 2019 you have $10,000 in credit card debt, $15,000 in student loan debt and $3,000 in medical expenses. You have a total debt of $28,000. The calculator will estimate $8,000 to $11,000 in total savings and offer plans where you could be debt-free by June 2023.

How debt settlement programs work

If you’re dealing with a large amount of debt and are struggling with payments, debt settlement may make sense for you. Debt settlement typically involves working with a service or company that will negotiate and settle debts on your behalf. Although you can negotiate your debts on your own to avoid the cost that comes with working with a debt settlement service, the process can be difficult and time-consuming.

When you enroll in a debt settlement program, you stop paying your creditors directly and instead make a monthly payment into a separate bank account that has been set up to settle your debt. When enough money has been deposited into the account, the debt settlement company will use the funds to negotiate and pay your debt in one lump sum that is less than what you owed.

Debt relief providers typically charge a fee for their services, about 5% to 25% of the amount of debt being settled. However, the expert advice and actionable steps that follow, such as helping you settle your debt for less than you owe, could improve your personal finances — and make that extra fee worth it.

Downsides to debt relief programs

There are some drawbacks to debt settlement, however. For starters, your credit will be negatively impacted. Since debt settlement requires that some time passes without making any payments to creditors, this gets reflected on your credit score. Then, when accounts are settled and the debt settlement company offers a sum lower than the total amount of debt owed, this will also negatively impact your credit score.

Furthermore, during the period when you are not making payments, late fees and other penalties caused by nonpayment could accrue. Your forgiven debt could also qualify as taxable income.

How debt consolidation differs

Debt consolidation is another form of debt relief that helps you tackle debt with high interest rates, except it won’t hurt your credit. It involves taking out a new loan or line of credit and using it to pay off your existing debt. Ideally, you’ll consolidate your debt to a lower interest rate.

You have various options for consolidating debt. You may use a personal loan, balance transfer credit card or home equity loan, for starters. A personal loan or balance transfer card requires you to have strong credit, though a secured loan like a home equity loan may be easier to qualify for.

Consolidation can streamline your finances by reducing the number of creditors you’re making payments to. It could also lower how much you pay in interest over time. For those with a large amount of debt, a personal loan with a longer repayment term could reduce your monthly payments, though you’d pay more in interest over time.

FAQ: Debt relief programs

Debt relief is a general term used to describe various ways you can pay off your debt. Debt settlement and debt consolidation are two forms of debt relief. Bankruptcy is another well-known form of debt relief, as are the debt snowball and debt avalanche repayment methods.

This debt relief calculator focuses on debt settlement and shows you debt relief companies that can help you settle that debt.

Here’s a closer look at debt relief companies and how they compare to one another. Consider the following: consumer reviews, fees, accreditation, and the minimum amount of debt they are willing to work with.

Yes, you can settle your debt on your own. Although the process can be daunting and time-consuming — you’ll need to take time to speak with creditors directly — you can save money by avoiding the fees you’d pay to a debt relief company.

Debt relief could negatively impact your credit score if you are going the debt settlement route and will stop payments on existing debts for an extended period of time.

Debt settlement is a personal decision and is based on your own unique financial situation. When determining whether to move forward, consider these best practices. For starters, check with the Better Business Bureau to see if the company remains in good standing. In addition, be wary of any company that asks for money in advance or does not clearly list their fees.