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Model how debt settlement could affect your monthly payments and payoff timeline. Get your personalized estimate in 2 minutes.
This helps us provide accurate estimates based on your local debt relief landscape.
Your information is private and secure
This calculator models two distinct financial scenarios to help you understand your options. First, we calculate your current path—what happens if you continue making minimum payments on your existing debt. This shows how long it will take to become debt-free, how much total interest you'll pay, and what your financial trajectory looks like without intervention.
Second, we model a potential relief path through debt settlement. This scenario estimates what could happen if you work with a settlement company to negotiate reduced balances with your creditors. We calculate potential settlement amounts based on industry data, add realistic program fees, and show what your monthly payments and total costs might be under this approach.
The side-by-side comparison reveals potential monthly savings, total debt reduction, and timeline differences between these paths. This visualization helps you weigh the trade-offs and understand whether debt relief might be worth exploring further.
Our calculations incorporate 12 key variables that influence debt relief outcomes. Financial variables include your total unsecured debt amount, current monthly minimum payments, average interest rate, and the predominant type of debt (credit cards, medical bills, personal loans, or mixed). These numbers directly affect both your current payment timeline and settlement potential.
Situational variables shape settlement likelihood: how old your oldest unpaid debt is, your current payment status (current, occasionally late, frequently missing, or 60+ days behind), and your employment status. Creditors negotiate differently based on these factors—older debts in default typically settle for larger reductions than recent debts where you're current on payments.
Personal financial variables determine affordability: your monthly household income, essential monthly expenses, and optionally, any documented hardship circumstances (job loss, medical emergency, divorce, etc.). These factors help us calculate realistic monthly payment amounts and program durations based on your actual ability to pay.
Your results screen shows comprehensive information to help you evaluate both paths. For the current path, you'll see the total amount you'll pay over time (including all interest), your monthly payment amount, and how many months or years until you're debt-free. If your minimum payment doesn't even cover the monthly interest charges, we'll flag this as "unsustainable" and explain why this path leads nowhere.
For the relief path, results include the estimated settled amount (what you'd pay creditors after negotiation), settlement company fees (typically 20-25% of enrolled debt), total program cost (settled amount plus fees), estimated monthly payment based on your disposable income, and program duration (usually 24-48 months). We show potential monthly savings and total debt reduction compared to your current path.
Results also include a confidence score that determines whether we suggest speaking with a debt relief specialist (high confidence) or simply offer an optional consultation form (exploratory cases). This routing is based on factors like debt amount, payment status, and debt-to-income ratio—indicators that settlement might be particularly beneficial in your situation.
Explore all our debt calculators →The Current Path represents your financial trajectory if nothing changes. We use standard amortization formulas with compound interest to calculate exactly how long it takes to pay off your debt making minimum payments. Every month, interest accrues on your remaining balance, and only the portion of your payment exceeding that interest reduces your principal. This path shows the reality of minimum payments—often taking 5-10+ years with total costs far exceeding your original debt amount due to accumulated interest.
The Relief Path models a debt settlement scenario where you stop making payments to creditors and instead save money in a dedicated account. Once sufficient funds accumulate, a settlement company negotiates lump-sum payments with your creditors for less than the full balance. This path typically takes 24-48 months, reduces your total debt burden, and can lower monthly payments—but it involves stopping payments (which damages credit), settlement company fees, and the uncertainty of creditor cooperation.
Neither path is universally "better"—the right choice depends on your specific situation, financial goals, and circumstances. The comparison helps you understand the trade-offs: the current path maintains your credit but may be financially unsustainable, while the relief path offers potential savings but comes with credit consequences and fees.
Settlement percentages represent what portion of your debt you'd actually pay after negotiation. For example, a 50% settlement percentage means you'd pay 50 cents on the dollar—a $10,000 debt might settle for $5,000. These percentages aren't arbitrary; they're based on documented patterns from Federal Trade Commission and Consumer Financial Protection Bureau data showing what creditors have historically accepted.
Several factors influence settlement percentages. Debt age is crucial—creditors are more willing to negotiate on older debts, especially those approaching statute of limitations.Payment status matters significantly; accounts in severe default (60+ days behind) typically settle for larger reductions than current accounts. Debt type affects negotiations too; medical debt often settles more favorably than credit card debt because medical providers are less aggressive collectors.
Our calculator uses a lookup table with base percentages by debt age, then applies modifiers for payment status, debt type, documented hardship, and high debt-to-income ratios. The final percentage is clamped between 40% and 75%—meaning settlements range from paying 40 cents on the dollar (best case, 60% debt reduction) to 75 cents on the dollar (conservative case, 25% reduction). Your individual percentage depends on your specific circumstances as entered in the calculator.
All relief path estimates include settlement company fees because transparency matters. Settlement companies typically charge 20-25% of your enrolled debt amount (what you owe when you start, not what you settle for). This is an industry standard and it's legal, but many calculators hide these fees to make programs look cheaper than they are.
Here's an example: if you enroll $30,000 in debt and settle it at 50% ($15,000 to creditors), the settlement company might charge 22.5% of the original $30,000, which is $6,750. Your total program cost would be $21,750 ($15,000 settled + $6,750 fees), not just the $15,000 settlement amount. Our calculator shows you both numbers clearly so you understand the complete financial picture.
The "estimated total reduction" you see in results accounts for these fees. If we show potential savings of $8,250, that's your true savings after paying both creditors and settlement company fees—compared to paying your debts in full via minimum payments. This honest accounting helps you make informed decisions rather than discovering hidden costs later in the process.
Our calculator is available for all 50 U.S. states. Select your state below for jurisdiction-specific information and estimates.
See all 50 states →Our calculator serves 9 Canadian provinces with PIPEDA-compliant privacy standards and province-specific context.