Debt Reduction Services Review

Unlike many other debt relief services who help clients out of debt with a process known as debt settlement, Debt Reduction Services offers assistance via debt management plans (DMPs). With a debt management plan, clients get help negotiating payments and interest rates with their creditors, after which they'll make a single monthly payment to the agency they're working with.

Once their plan is underway, Debt Reduction Services will disburse payments to each of the creditors in the plan each month. This strategy helps clients simplify their finances with one monthly debt payment instead of several, and it also helps them stay on track and avoid becoming overwhelmed by the process.

Debt Reduction Services has no minimum debt amount to qualify for their plans, and either way, their credit counseling services are always free. Your certified debt counselor will also help you develop a household budget that will work with your lifestyle and your goals.

Pros Explained

• Free budget planning and credit counseling available: Even if you don't want to enroll in a debt management plan (DMP), you can turn to Debt Reduction Services for free credit counseling and budgeting assistance.
• A debt management plan (DMP) can help you reduce payments by up to 50% and interest rates by up to 75%: While DMPs don't help you settle debts for less than you owe, they do help you cut fees and interest so you can get out of debt faster.
• Unlike debt settlement, debt management plans (DMPs) typically do not harm your credit score; enrollment in a plan could even improve your credit substantially: Once you begin working through your plan, on-time payments made to your creditors should provide a boost to your score over time.
• Client dashboard makes it easier to track your debt payoff progress in real time: Debt Reduction Services offers an online client portal that lets you keep track of your plan details online and in real time.

Cons Explained

• No mobile app: Debt Reduction Services has an online client portal but not a mobile app.
• Fees are debt management plans (DMPs) are not disclosed upfront: Your debt management plan (DMP) will require a one-time setup fee as well as plan fees that are not disclosed.
• Debt management plans (DMPs) cannot be used to consolidate secured debts: You cannot use a DMP to consolidate secured debts like a mortgage or an auto loan.

Types of Debt Addressed

Debt Reduction Services offers credit counseling that can help you navigate every type of debt you have, yet their debt management plans (DMPs) only work for specific types of debt. Here are the types of debt this company can help you address.

Credit Card Debt

Credit card debt is one of the most common types of debt that is bundled into debt management plans (DMPs). Debt Reduction Services can help you lower your monthly payments and your interest rate in order to make this type of debt more manageable.

Medical Bills

Medical bills can also be addressed in a debt management plan (DMP). Debt relief companies like Debt Reduction Services will work with hospitals, doctors, and other medical providers to help negotiate a debt payoff plan you can live with. 

Payday Loans

Debt Reduction Services can also help with payday loans, which often feature interest rates as high as 500%. With some assistance, you can break the costly cycle of using payday loans to keep up with regular expenses and bills. 

Client Onboarding

Debt Reduction Services offers free credit counseling and budgeting help, and you can access this assistance without any sort of financial commitment. It all starts with a free consultation, during which you'll discuss your finances and your debts with a certified debt specialist.

If you decide a debt management plan (DMP) is for you, your debt specialist will explain the specifics of your plan including any fees you'll have to pay. There is no minimum debt amount to get started, although Debt Reduction Services says you'll probably want to handle unsecured debts of $100 or less on your own. 

Customer Service

Debt Reduction Services has two brick-and-mortar locations, one in Boise, Idaho, and another in Bohemia, New York. If you live close to either of these cities, you may be able to make an in-person appointment. 

However, this company is licensed in all 50 states, the U.S. Virgin Islands, Guam, and all active U.S. military bases around the world, so you can sign up for assistance no matter where you live. Their toll-free number is 1-866-688-3328, although they don't list specific hours for phone-based customer service inquiries.

This company does offer an online client portal, which can help you keep track of your debt payoff progress any time of the day or night. The portal lets you print reports, send secure messages to your debt advocates, view payments to your creditors, and more. 

Company Reputation

The debt relief industry has plenty of reputable companies, but you'll need to do some research before you reach out to one for help. For example, you can check whether companies are members with the Financial Counseling Association of America (FCAA) or the American Fair Credit Council (AFCC).

The company has also earned membership with the Financial Counseling Association of America (FCAA). Note that Debt Reduction Services is not part of any lawsuits brought on by the Federal Trade Commission (FTC).

Average Relief Amount

Debt Reduction Services claims they can help clients reduce interest rates by as much as 75%. They can also reduce your monthly payments by as much as 50% while eliminating late fees and over-the-limit fees. 

Average Time for Relief

The average debt repayment timeline for debt settlement falls between 24 to 48 months, but Debt Reduction Services doesn't list a specific timeline for their debt management plans (DMPs). Ultimately, your plan length will vary depending on how much debt you have, how much you can afford to pay each month, and other factors.

Cost

Debt Reduction Services says you are required to pay a one-time setup fee to begin your debt management plan (DMP), yet they say this fee varies depending on the state you live in. They also fail to disclose the ongoing fees you'll pay as your debt management plan (DMP) progresses. 

Competition

If you're struggling to get out of debt and looking for a service that can help, you should consider all the different options that are available to you. This means taking a closer look at firms that offer debt management plans (DMPs), yet it also means looking into credit counseling, debt consolidation, or debt settlement plans as well.

To help in that respect, we decided to compare Debt Reduction Services to Freedom Debt Relief, a popular company in the debt settlement industry. But first, you should know that debt settlement works differently. Instead of consolidating debts and reducing your monthly payments and interest rates, debt settlement can help you negotiate and settle debts for less than you owe. This means that, by and large, debt settlement can help you get out of debt without having to repay all the money you borrowed, whereas debt management plans (DMPS) can only help you reduce interest and fees.

Another benefit of debt settlement is the fact that you won't pay any upfront fees, and that you'll only pay fees as each of your debts is settled. Ultimately, Freedom Debt Relief says you may be able to settle your debts for 50% of what you owe (including original balances plus interest and fees) and potentially less. It is important to note, however, that while a debt management plan may improve your credit, a debt settlement may harm your credit, since the debt will be settled, which can reflect an incomplete payment.

In summary, debt settlement from a company like Freedom Debt Relief may help you pay a lot less toward your debts over all when compared to debt management plans (DMPs). Freedom Debt Relief is also more transparent about their fees and how long it might take you to get out of debt, which is why we can recommend considering Freedom Debt Relief for your debt relief goals. 

Methodology

Investopedia compared more than 15 top debt relief companies to find the best in terms of stability (5%), reputation and customer satisfaction (10%), customer experience (7%), services (30%), and cost and fees (48%). We considered whether companies had a membership with the American Fair Credit Council, as well as how long they have been in business. We reviewed the types of services offered, like counseling, debt settlement, tax relief, and more. We also compared companies' money-back guarantees, upfront fees, fee percentage closed, and cancellation policies. For more about how we rate, review, and select the best debt relief companies, read our full methodology.