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American Debt Relief vs. National Debt Relief: How These Services Compare

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The concept of debt settlement sounds good: Set aside savings, have a debt relief company offer discounted payments to your creditors, pay the negotiated amount and, voilà, you’re debt-free.

But the truth behind debt settlement is that it’s extremely risky, often expensive and almost always hurts your credit. We’ll take a look at two debt settlement companies — American Debt Relief and National Debt Relief — and talk a bit about the industry itself.

American Debt Relief vs. National Debt Relief

Comparing debt settlement companies
American Debt Relief National Debt Relief
Eligibility requirements Requires proof of financial hardship $7,500 minimum in unsecured debt; be several months behind on payments
Fees Not available online 15% to 25% of the debt total
Upfront fees? No No
Term On average, 25 to 48 months 24 to 36 months
Possibly savings Not available online Potentially up to 50%, though fees can lower that total
Accreditations Federal Trade Commission-compliant
American Fair Credit Council
Better Business Bureau
American Fair Credit Council

How debt settlement works

Debt settlement typically involves consumers putting money into an escrow-like account monthly for two to three years (though it can be longer). Next, a debt settlement or debt relief company contacts your creditors and negotiates a lump-sum settlement that’s generally less than the total balance due.

There is no guarantee that your creditors will accept the plan or work with the debt relief company you’ve chosen. Adding further risk, you’ll often be asked to stop payments while you’re saving for the possible settlement, so you’re also driving up your balances through late fees and interest.

Debt settlement companies typically charge a fee that’s equal to a percentage of your settled debt, though it can be based on your total debt when you enrolled in the plan. It’s illegal to charge fees upfront, but some companies will settle debts as you accrue savings to be permitted to start collecting a fee.

American Debt Relief vs. National Debt Relief: Differences and similarities

When it comes to the differences and similarities between American Debt Relief and National Debt Relief debt settlement, there isn’t much to see — at least from what’s available online.

Here are a couple possible differences:

  • American Debt Relief reviews your situation and can start settling your debt in six months, while National Debt Relief doesn’t offer related specifics.
  • American Debt Relief has a bulk negotiations program, which means the company settles multiple clients’ debts with each creditor, giving the company more leverage. National Debt Relief’s website doesn’t highlight a bulk program.

As for similarities, both:

  • Have a general time frame of approximately two to three years to settle debt, though the American Debt Relief program highlights that as the low-end range
  • Offers free consultations, weekday customer service and online platform logins
  • Mention not charging upfront fees (though, it’d be illegal to charge them)
  • Work only with consumers facing financial hardship that prevent them from making payments on their unsecured debts each month

How to qualify

American Debt Relief reviews your financial hardship but lists no qualification information.

National Debt Relief has the same hardship requirement, but it also mentions that your unsecured debt must be at least $7,500.

Neither website highlighted additional qualification information, so you’d need to reach out to either company if you have specific questions.

Cost and savings comparison

Consumers should always make a cost comparison when evaluating two debt settlement companies. Since American Debt Relief doesn’t disclose its fees upfront, consumers would need to ask for a quote to make a direct comparison.

National Debt Relief does share its fees range, so let’s look at an example of what a user could save with this company. Note that this is purely speculative since the company can’t guarantee any results.

National Debt Relief: Debt repayment example
Amount of debt $25,000
Monthly payment $730
Number of months 24
Total paid $17,520
Savings $7,480 (close to 30%)

Which is the better choice?

It’s difficult to objectively say whether American Debt Relief or National Debt Relief is a better choice for consumers who want to reduce their debt. Strictly from a transparency viewpoint, National Debt Relief would be the winner since its website has more information about costs, eligibility and the process. It is possible, however, that after completing American Debt Relief’s free debt assessment and getting more information that consumers may find that it has better terms.

Another factor will be the state in which you live. If you live in a state that caps charges by debt relief companies, it might be more advantageous to try one of these services than it would if you didn’t. Neither site advertises the states in which it operates, so reach out to both if you’re looking for specificity.

Finally, there’s the consideration that debt settlement in itself might not be a smart move, since these companies can make no guarantees of successful debt reduction. There is also a tremendous risk of collection action, and even lawsuits, when leaving accounts unpaid for this long.

Debt settlement FAQ

  1. Is the American Debt Relief program a scam?
  2. Is National Debt Relief a scam?
  3. Is debt settlement right for me?
  4. Will I pay taxes on my settled debt?
  5. Can I settle my debt on my own?
  6. Will debt collectors call me?
  7. Can a creditor still sue me?
  8. What other options do I have for debt relief?
  9. What happens if I can’t meet my debt relief savings obligations?
  10. What will happen to my credit?
  11. Will my accounts still accrue late fees and interest during the program?

1. Is the American Debt Relief program a scam?

No, though you should always be careful with debt relief companies. American Debt Relief is a member of the American Fair Credit Council (AFCC). It is also an International Association of Professional Debt Arbitrators (IAPDA) accredited service center.

2. Is National Debt Relief a scam?

No. National Debt Relief is accredited by the AFCC, the Better Business Bureau and, like American Debt Relief, IAPDA. Its website also states that it is compliant with the Federal Trade Commission.

3. Is debt settlement right for me?

While debt settlement may save you money by lowering your balances and reducing the time it takes to pay back your debt, the costs and risks are high. There are large fees, there is potential for collections and legal action, it will negatively impact your credit and there’s no guarantee that adequate settlements can be made.

4. Will I pay taxes on my settled debt?

The IRS considers reductions through debt settlement to be a taxable gain, so you will likely receive a 1099-C for any savings of $600 or more. These gains need to be reported on your annual tax forms and may result in added taxes due or a reduction in your refund.

5. Can I settle my debt on my own?

Yes, you can settle your own debt. If you have a lump sum to offer a creditor that is less than the total amount you owe, you may be able to call the creditor and ask the company to accept that lesser amount for payment in full. Creditors are more likely to agree when you are behind in payments. If you don’t have a lump sum to offer a creditor, you may be able to negotiate for the removal of some interest and late fees as a one-time courtesy.

6. Will debt collectors call me?

It’s possible. During the debt relief process, you spend a lot of time not paying your creditors as you set aside funds for the debt relief companies to use during negotiation. During this time, creditors may send your account to collections, and you may begin getting collection letters and phone calls.

7. Can a creditor still sue me?

Yes. As you continue to leave accounts unpaid, creditors can sue you to collect.

8. What other options do I have for debt relief?

There are many ways to deal with debt without going through debt settlement. Some include:

  • Debt consolidation: You can work with a debt consolidation company without having to keep your credit accounts unpaid for months or years. Or you can consolidate your debt through a personal loan or balance transfer credit card, among other options.
  • Bankruptcy: When you qualify, bankruptcy can discharge your unsecured debts with no payments or a payment plan that lasts three to five years. There are costs associated with bankruptcy, including attorney fees, and it will show on your credit report, although whether it’s worse than what happens to your credit with debt relief is hard to say. Also, bankruptcy offers you an automatic stay in collections activities, garnishment and legal action.
  • A new budget: With a proper budget, you may find that you can pull yourself out of debt without having to get behind in payments to creditors.

9. What happens if I can’t meet my debt relief savings obligations?

In this case, you may be charged for those debts the company settles, but be unable to have your whole debt negotiated. You can then withdraw your remaining funds.

10. What will happen to my credit?

Since the nature of the program is to have debtors avoid paying their unsecured debt bills during the years they are saving money with which to negotiate a lower balance, participants should expect that their credit scores will suffer and likely worsen the longer they go without making payments.

11. Will my accounts still accrue late fees and interest during the program?

Yes. Debt relief companies expect consumers to stop paying their bills while they put money into a savings account each month. After several months or years — once there’s enough money in the savings account to make lump-sum payments — the debt relief company will try to negotiate down the debt with the creditor. During the time funds are put into savings, no payments are made to creditors, which means late fees, interest charges and collections activities can begin (or continue).


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