For consumers considering debt settlement, understanding the cost of professional help is an important part of deciding whether the approach makes sense.
In recent coverage, CNBC Select examined how debt settlement companies charge for their services, how fees can affect overall savings and what consumers should know before enrolling in a program. The article features insights from Brit Simon, Chief Experience Officer at National Debt Relief, who explains several important aspects of how debt settlement works in practice.
CNBC Select notes that settlement fees commonly range from 15% to 25% of the debt a consumer enrolls. The exact percentage can depend in part on state regulations, making a consumer’s current state of residence an important factor in determining how a program is structured.
Simon explained that where a consumer currently lives, not where the debt was originally incurred, determines which state’s rules apply. He gave the example of someone who incurred debt in Texas and later moved to New Mexico, noting that the consumer would be enrolled under New Mexico’s rules based on their current address.
When Debt Settlement Fees Are Charged
The CNBC Select article also examines when debt settlement companies are permitted to collect their fees.
Federal Trade Commission requirements prevent debt settlement companies from charging a fee before they successfully negotiate a reduction on a specific debt and the consumer makes at least one payment toward the settlement.
Simon described how that process works at National Debt Relief: “We don’t take our fee until the customer says, ‘I like this settlement and I approve it,’” he told CNBC Select. Once the consumer approves the settlement, funds from the dedicated savings account can be used toward the payment to the creditor and the settlement fee.
That approval process is an important distinction for consumers evaluating debt settlement companies because it helps clarify when fees become due and what milestone must be reached first.
CNBC Select Examines Potential Savings After Fees
Beyond the cost of a debt settlement program, CNBC Select also looks at how much consumers may ultimately save after fees are taken into account.
According to Simon, National Debt Relief clients save an average of 45% on their enrolled debt before fees. CNBC Select illustrates that with a hypothetical $10,000 balance: if $4,500 was saved before fees and the settlement fee was 25% of the enrolled debt, the consumer could still realize approximately $2,000 in savings before accounting for maintenance fees and other charges.
The article also notes that National Debt Relief says clients who complete its debt settlement program reduce their enrolled debt by an average of 20% to 25% after fees.
These figures help illustrate why consumers should look beyond either the settlement percentage or the service fee alone. The more useful comparison is the potential reduction in debt after the full cost of the program is considered.
Experience and Guidance Are Part of the Value
CNBC Select also explores why some consumers choose to work with a debt settlement company rather than negotiate directly with creditors.
Debt settlement can involve multiple accounts, creditor conversations, budgeting decisions and ongoing financial education. In the article, Simon points to experience and consumer support as part of National Debt Relief’s role in that process.
“We have the process and the experience — that’s our core value proposition,” Simon said, adding that the company also provides coaching and financial guidance as consumers move through the program.
That perspective reinforces one of the article’s broader themes: evaluating the cost of debt settlement also means understanding what consumers receive in return for the fee, including negotiation experience, creditor relationships and guidance throughout the process.
CNBC Select’s coverage gives consumers a closer look at how debt settlement fees work, how potential savings are calculated and the role professional support can play when managing multiple unsecured debts.
For more on debt settlement costs and Brit Simon’s insights, read the full CNBC Select article.
