Debt relief fees and risks: what to ask before enrollment
Separate a free consultation from program costs. Understand creditor, credit, tax and cancellation questions before considering debt settlement.
The initial Done With Debt consultation is free. A third-party program can have fees and financial consequences. Ask the provider for a complete written explanation before deciding.
Ask for the full cost, not just a monthly amount
A proposed monthly deposit is not necessarily a payment to your creditors, and it is not the same thing as the program fee. Ask how each dollar is used, who holds it, and when it can be withdrawn.
We do not publish a universal provider fee or savings estimate because terms vary. Ask the provider to identify every fee, the amount used to calculate percentage fees, when each charge is earned, and any account maintenance or other charges.
- Ask what you would pay if only some debts were settled.
- Ask what happens to your money and earned or unearned fees if you cancel.
- Treat pressure to pay before receiving clear written terms as a reason to pause and investigate.
Sources: FTC: How to get out of debt · Done With Debt: Our role and contact details
Credit, interest and collection risks
Missed creditor payments can damage credit. Interest and fees may continue to increase balances, and creditors or collectors may contact you or pursue legal action. Setting money aside for a possible agreement does not itself satisfy the debt.
Creditors are not required to settle. A program does not guarantee that calls stop or that lawsuits will be prevented. If you receive court papers, promptly consult a qualified attorney about your response and deadlines.
Sources: FTC: How to get out of debt · CFPB: Debt collection resources
Compare offers with a simple worksheet
Request these numbers for each proposal. If a number is an estimate, identify the assumptions and what could make it change.
| Item | What to record |
|---|---|
| Starting debt | Which balances are included and the date measured |
| Creditor payments | Proposed payments to creditors, distinct from fees |
| Provider and account charges | Each charge, calculation basis and timing |
| Funding and duration | What you must contribute and for how long |
| Excluded debts | Payments still required outside the program |
| Cancellation or noncompletion | Money returned, fees retained and unresolved obligations |
Sources: FTC: How to get out of debt
Canceled debt may have tax consequences
The IRS explains that canceled debt is generally taxable unless an exception or exclusion applies. Bankruptcy and insolvency can matter, but eligibility depends on your particular facts. A Form 1099-C does not by itself determine every reporting question.
Ask a qualified tax professional how a possible cancellation would affect you. Done With Debt does not determine your tax liability or provide tax advice.
Sources: IRS: Canceled debt and tax · Done With Debt: Our role and contact details
Weigh the risk against other options
Compare settlement with repayment, creditor hardship arrangements, credit counseling and legal advice about bankruptcy when appropriate. The lowest advertised monthly amount is not automatically the lowest total cost or the safest fit.
No settlement amount, savings percentage or completion date is guaranteed. Not everyone completes a debt resolution program. Services are unavailable through Done With Debt to residents of Arkansas, California, Hawaii, Louisiana, New Jersey, North Carolina, Oregon or Wyoming.
Sources: FTC: How to get out of debt · Done With Debt: Our role and contact details
Sources and further reading
- FTC: How to get out of debt
- IRS: Canceled debt and tax
- CFPB: Debt collection resources
- Done With Debt: Our role and contact details
General educational information. This guide does not assess your circumstances or replace financial, legal or tax advice. Read our editorial policy.