Find out how much you could save by settling your debt for less than the full balance. No signup required. Instant results.
Credit cards, medical bills, personal loans, etc.
Typical range: 35% to 60% of original balance. Average is ~48%.
Most companies charge 15% to 25% of total enrolled debt.
Forgiven debt may be taxable as income (IRS Form 1099-C). Enter 0 if you qualify for insolvency exclusion.
The settlement amount is calculated by multiplying your total debt by the settlement percentage you negotiate (or expect to negotiate) with your creditors. For example, if you owe $25,000 and settle at 48%, you pay $12,000 to the creditor.
Settlement Amount = Total Debt x (Settlement % / 100)
Debt settlement companies typically charge a fee of 15% to 25% of the total enrolled (original) debt. This fee is separate from what you pay your creditors and is an important cost to factor in.
Company Fees = Total Debt x (Fee % / 100)
The IRS generally treats forgiven or cancelled debt as taxable income. The forgiven amount is the difference between your original debt and the settled amount. You may receive a 1099-C form. Enter your estimated tax rate to see this potential cost. (If you are insolvent at the time of settlement, you may qualify for an exclusion, so enter 0% in that case.)
Forgiven Debt = Total Debt - Settlement Amount
Tax Owed = Forgiven Debt x (Tax Rate / 100)
Your total cost to settle is the sum of the settlement amount, company fees, and estimated taxes. Your net savings is the difference between your original debt and this total cost.
Total Cost = Settlement Amount + Fees + Tax
Net Savings = Total Debt - Total Cost
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