How We Calculate Debt Relief Estimates

Our calculations are based on industry data, settlement patterns, and mathematical modeling reviewed by a Certified Public Accountant.

Important: Results shown are modeled estimates for educational purposes only. Actual results depend on creditor participation, eligibility, and personal financial history. This calculator does not guarantee debt relief or specific outcomes. Individual results vary.

Current Path Calculation

The "Current Path" shows what happens if you continue making minimum payments without seeking relief. We calculate how long it takes to pay off your debt with compound interest accumulating monthly.

Algorithm:

Each month, calculate interest charge (balance × rate ÷ 12)
Subtract interest from your minimum payment to find principal reduction
If minimum payment doesn't cover interest, path is "Unsustainable"
Continue until balance reaches $0 or 50 years (whichever comes first)

Settlement Percentage Calculation

Settlement percentages reflect what creditors historically accept based on FTC and CFPB data. The percentage represents what you'd pay, not what's forgiven.

Debt Age	Base Settlement %	Debt Reduction
Less than 6 months	65%	35% off
6-12 months	60%	40% off
1-2 years	55%	45% off
2-3 years	50%	50% off
3+ years	45%	55% off

Settlement Modifiers

We adjust the base settlement percentage based on these factors:

Payment Status: 60+ days behind: -5% settlement | Frequently missing: -3%
Debt Type: Medical debt: -5% (creditors more willing to negotiate)
Hardship: Documented hardship: -3%
Debt-to-Income: DTI over 50%: -3%

Relief Path Calculation

The "Relief Path" models a debt settlement scenario including all costs:

1. Settled Amount: Total debt × settlement percentage
2. Settlement Fees: Total debt × 22.5% (industry average)
3. Total Program Cost: Settled amount + fees
4. Monthly Payment: Based on 50% of disposable income
5. Duration: 24-48 months (industry standard)

Why We Include Fees

Many calculators show only the settled debt amount, making programs look cheaper than they are. We include settlement company fees (typically 20-25% of enrolled debt) because we want you to see the complete financial picture. Your estimated savings already account for all costs.

Limitations

Our calculator cannot predict:

Whether your specific creditors will negotiate or settle
What settlement percentage they'll ultimately accept
How your financial situation will evolve during a program
Your eligibility for any particular relief program
Credit score impact or recovery timeline

Think of estimates as educated projections based on thousands of similar cases, not guarantees. The math is correct, but real-world outcomes depend on creditor participation and your individual circumstances.

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