Is your debt growing each month? Are you struggling to keep up with the number of creditors to whom you owe money? Debt settlement could be an option. For a fee, private companies negotiate reduced payments with your creditors, lowering the amount of debt you owe. This is a different approach than debt consolidation, in which your existing debts are combined into one account that you then pay off with regular monthly payments.
Camarillo, Calif.-based New Era Debt Solutions specializes in debt settlement and might be able to help you settle your debt. Here’s what you need to know.
What is New Era Debt Solutions?
New Era Debt Solutions has an A-plus rating with the Better Business Bureau. The company boasts competitive settlement agreements and a high success rate.
Breakdown of New Era Debt Solutions
Let’s break things down even further:
Minimum debt required
New Era does not specify a minimum debt level to participate in its services.
New Era says participating in debt settlement will hurt your credit score.
Debt settlement timeline
New Era says the average customer completes its debt settlement process slightly more than 27 months.
New Era doesn’t list specific fees, but does say it only charges clients after a settlement has been reached. It does not charge any upfront fees.
New Era only charges fees after a settlement has been reached.
Types of debt accepted
New Era says it can settle unsecured debt. Everything from credit cards to unsecured personal loans can be negotiated. New Era can't work with secured debt such as mortgages and auto loans. The creditors behind this debt can simply take back the collateral by foreclosing on your home or repossessing your car.
New Era is an accredited member of the Better Business Bureau.
New Era has an A+ rating from the Better Business Bureau.
New Era does not operate in Iowa, Maine, North Dakota, South Carolina, South Dakota or West Virginia.
Free tools and resources
New Era’s website includes information about debt reduction options. It also features a debt reduction calculator that can help you calculate how long it will take you to pay down your debt.
It’s easy to contact New Era. You can visit this page to reach out to the company online or you can call New Era at 800-527-4421 .
New Era doesn’t list any strict requirements for who can and can’t qualify for debt settlement. New Era doesn’t list a minimum amount of debt that you need to qualify or a minimum income or credit score.
The company, though, does provide some general guidelines:
- New Era does say that consumers who are struggling mostly with credit card debt are the best fit for its services.
- Those consumers who are fighting a financial hardship — caused by events such as a job loss, medical issues or a divorce — are also a better match for debt settlement.
- Household income matters, too. As New Era says, participants will need to have money available to make payments on whatever debt settlement they reach.
- New Era says participants in its program should be able to set aside about 1.5% of their debt amount on a monthly basis to cover the payments of a debt settlement. The company gives this example: If you owe $30,000 in unsecured debt, you should be able to devote $450 a month to pay back your new negotiated debt. If you do this, New Era says, it would take you about three years to pay back the average settlement.
Benefits and risks of New Era Debt Solutions
There are no upfront fees involved with working with New Era Debt Solutions. You are only charged after you agree to a debt settlement deal. This is known as a performance-based fee model.
Your three-digit credit score is probably already dinged if you are looking to settle your debt. But, as New Era says, your score will fall even further if you agree to debt settlement.
Debt settlement could save you a significant amount of money. New Era says it settles clients’ debt for an average of 43.73% of what they owe.
It’s not the fastest process. New Era says it takes clients about 27 months to complete the debt settlement process.
Most people who start a program with New Era do finish. New Era says only slightly more than 18% of clients drop out before reaching a settlement.
The collection calls won’t necessarily stop. If you are stressed by the calls from collection agencies, New Era can’t promise that you won’t receive any new calls while in the program. Collection agencies don’t have to stop calling just because you are enrolled in a debt settlement program.
The odds are low that you’ll be sued once you begin the debt settlement process. New Era says only 6% of its clients experience any legal activity.
Not all debt can be settled. New Era says it can settle most forms of unsecured debt, but it can’t settle auto loans or mortgages — debt that requires collateral. New Era also can’t negotiate federal student loan debt, but it can settle private student loans that are in default.
How much does New Era Debt Solutions cost?
New Era Debt Solutions does not provide pricing information on its website. The company does, though, operate under a performance-based fee model, meaning that you are not billed until a debt settlement has been reached. New Era does not charge monthly administrative fees.
The amount New Era charges depend on several factors. The company says such factors like how much debt you owe, whether you can contribute monthly payments to pay down that debt after a settlement is reached and how long it takes for a settlement to be reached all affect how much you’ll pay.
How long does the program take?
New Era says debt settlement programs usually take three to four years from the time a client signs up. The company, though, says it acts faster, completing the debt settlement process in an average of 27.73 months.
Clients working with New Era who are struggling with debt from several creditors can expect to reach their first settlement within the first six months of starting the program, according to the company. In some instances, though, that first settlement can arrive even sooner. New Era states that some clients start receiving settlement offers from their creditors within 90 days.
It’s important to remember that no debt settlement company, including New Era, can guarantee that you’ll reach settlements with your creditors. New Era, though, does claim that most of its clients do agree to offers from their clients, saying that only 18% of its clients leave the program before settling their debts. New Era also says its clients usually pay about 43% of what they initially owed when signing up for the program. This, though, doesn’t guarantee that you will have the same success rate.
Is New Era Debt Solutions safe to use?
New Era Debt Solutions has been an accredited business with the Better Business Bureau since 2001. The bureau has zero customer complaints on file about the company.
Of the 19 reviews on the Better Business Bureau site, 18 were positive five-star reviews. Customers leaving reviews complimented the company on the regular contact and updates from New Era, the comprehensive way that employees explained the debt settlement process and the results that they received.
New Era also has no complaints listed in the Consumer Complaint Database maintained by the Consumer Financial Protection Bureau.
How do I sign up for New Era Debt Solutions?
New Era offers a free analysis of your debt. The company says it will review your basic information and send you an estimate of how much time the debt settlement process will take and how much money you might save.
To get started, you’ll have to send New Era your name, phone number, the state in which you live and how much money you owe.
You can also call New Era at 800-527-4421 to speak directly with a representative.
What to expect after signing up for New Era Debt Solutions
Once you sign up with New Era, representatives from the company will start negotiating with your creditors. How long this takes will vary, though New Era says you should start receiving your first settlement offer within six months.
Before starting the process, New Era will review your debts to determine which can be settled and which can’t. Unsecured debt — debt not tied to collateral such as a home or vehicle — can usually be settled. New Era says it can settle debts from credit cards, department store cards, signature loans, personal lines of credit and private student loans that are in default. The company, though, can’t settle debt associated with mortgages, federal student loans, car loans, credit unions and medical/hospital bills.
You will have to set up an escrow account during the process. This is an account that you pay into on a monthly basis so that when settlement offers are made, you’ll have the funds necessary to pay them. How much you deposit into the account will depend on the amount you owe and your monthly income.
Alternative methods to pay down debt
We’ll take a look at debt consolidation, debt management plans, bankruptcy and DIY debt settlement.
Part of the challenge when paying down a significant amount of debt? You have so many creditors to pay back, deciding who to pay first can become overwhelming. Debt consolidation can help with this.
In debt consolidation, a private company consolidates all your loans into one package. You then pay this company a single payment each month, and the company makes your payments on your behalf.
- Making just one payment a month can reduce the stress of paying down your debt.
- Your debt consolidation company might be able to reduce the interest rate you pay on your debt.
- Your debt doesn’t go away just because you are consolidating it into one payment. You still have to pay it off.
- You might end up paying more than what you owe when you factor in the fees that a debt consolidation provider charges.
Minimum 500 FICO
Minimum Credit Score
24 to 60
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Debt management plan
When you sign up for a debt management plan, you’ll work closely with a credit counseling agency that will set up a schedule for you to repay your debts. The goal is to leave you with a monthly payment that you can afford and that your creditors will accept.
After you agree on a debt management plan, you’ll send money directly to your credit counseling agency each month. This agency will then make payments to your creditors. The National Foundation for Credit Counseling says it usually takes three to five years to settle your debt through a debt management plan.
- Enrolling in a debt management program won’t affect your credit score.
- You can focus on making just one monthly payment, eliminating the stress of dealing with several different creditors.
- Credit counselors might be able to negotiate lower payoff amounts or interest rates on your debt.
- Debt management usually isn’t free. Your credit counseling agency will generally charge a setup and monthly fee.
- It can take a long time to pay off your debt.
Declaring bankruptcy can eliminate your debt, depending on the type you declare, but it will also have a devastating impact on your credit score. A Chapter 13 bankruptcy sets up a repayment schedule that allows you to pay back your debts at a pace you can afford. In a Chapter 7 bankruptcy, your unsecured debts could be eliminated. But you could also lose certain assets.
- A bankruptcy filing could wipe away some of your biggest debts.
- Collection agencies cannot pursue you for those debts that are discharged.
- Bankruptcy filings will wreck your credit score, causing it to fall by 100 or more points.
- Chapter 7 bankruptcy filings remain on your credit reports for 10 years, while Chapter 13 filings remain for seven.
DIY debt settlement
Instead of hiring a company to negotiate your debt on your behalf, you can try to settle your debt on your own. To do this, you’d have to contact companies, explain your financial situation and try to negotiate a lower payoff amount with them.
- You won’t have to pay fees to an outside company to negotiate your debt.
- You can tackle your outstanding debts in the order with which you feel most comfortable.
- Negotiating debt on your own will take plenty of time.
- You might not have the same negotiating skills possessed by private companies.