Pacific Debt Relief claims it can help you settle unsecured debts for roughly 50% of what you owe but after fees, you’ll typically pay 65-85% of your enrolled balance. Here’s what you need to know before signing up.
The Reality of Debt Settlement
If you’re drowning in credit card bills or medical debt, debt settlement sounds appealing: stop paying creditors, save money in a special account, and let a company negotiate lower payoffs. Pacific Debt Relief has been doing this since 2002, settling over $300 million in debt across 49 states (everywhere except Oregon).
But debt settlement isn’t a magic solution. Your credit score will drop, creditors might sue you, and the IRS could tax your forgiven debt as income.
How Pacific Debt Relief Works
The Process:
- Free consultation to see if you qualify (minimum $10,000 in unsecured debt)
- Stop paying creditors and deposit money monthly into an FDIC-insured account
- Pacific negotiates settlements once enough money accumulates
- You approve each settlement before payment
- Timeline: 24-48 months to complete
Eligible Debts:
- Credit cards
- Personal loans
- Medical bills
- Collections accounts
- Business debts
- Some private student loans
Ineligible Debts:
- Mortgages
- Auto loans
- Federal student loans
- IRS debt
- Court judgments
Cost Breakdown
Fees: 15-25% of your enrolled debt (varies by state and debt amount)
Example: You enroll $20,000 in credit card debt.
- Pacific negotiates settlements totaling $10,000 (50% savings)
- You pay Pacific’s 20% fee = $4,000
- Total paid: $14,000 (30% savings after fees)
- Plus ~$10/month account maintenance fee
Compare this to simply making minimum payments, which could cost you $30,000+ over 10+ years with interest.
Pros and Cons
Advantages:
- No upfront fees; you pay only after settlements
- A+ Better Business Bureau rating (4.93/5 stars)
- Personal account manager assigned to you
- Free consultation and educational resources
- Potential tax savings vs. bankruptcy
Drawbacks:
- $10,000 minimum debt requirement (higher than competitors)
- Credit score will drop significantly
- No mobile app or online portal
- Not available in Oregon
- Creditors may sue before settling
- Forgiven debt counts as taxable income
Top Alternatives to Consider
| Company | Minimum Debt | Fee Range | Best For |
| Pacific Debt Relief | $10,000 | 15-25% | Educational resources |
| National Debt Relief | $7,500 | 15-25% | Lower minimum |
| Freedom Debt Relief | $7,500 | 18-25% | Largest provider |
| Accredited Debt Relief | Varies | 15-25% | Fast settlements |
Who Should (and Shouldn’t) Use Pacific Debt Relief
Good fit if you:
- Owe $10,000+ in unsecured debt
- Are already behind on payments
- Can’t afford minimum payments
- Want to avoid bankruptcy
- Have steady income for monthly deposits
Skip it if you:
- Can pay off debt within 3-5 years on your own
- Have mostly secured debts (home, car)
- Live in Oregon
- Need to maintain good credit for a major purchase
- Owe less than $10,000
Frequently Asked Questions
Is Pacific Debt Relief legitimate?
Yes. Founded in 2002, it’s accredited by the BBB, Consumer Debt Relief Initiative, and International Association of Professional Debt Arbitrators. Only 6 BBB complaints in the past 3 years, all resolved.
How much will my credit score drop?
Expect a 100-200 point drop initially when you stop making payments. Accounts sent to collections stay on your report for 7 years. However, your score can recover within 2-3 years after completing the program.
What if my creditors won’t negotiate?
Some creditors refuse to work with debt settlement companies. Pacific Debt will inform you if negotiations fail and may suggest alternatives like credit counseling or bankruptcy.
Can I negotiate with creditors myself?
Yes and you’d save the 15-25% fee. However, most people lack the negotiating experience and time to manage multiple creditors effectively.
Will I owe taxes on forgiven debt?
Probably. The IRS typically counts forgiven debt over $600 as taxable income. If Pacific settles $10,000 for $5,000, you might owe taxes on the $5,000 difference.
How long until I’m debt-free?
Most clients complete the program in 24-48 months, depending on debt amount and monthly deposit size.
The Bottom Line
Pacific Debt Relief delivers solid results for people with significant unsecured debt who can’t keep up with payments. The company’s transparency about fees, strong customer ratings (4.7/5 on Trustpilot), and experienced negotiators make it a reliable choice.
However, debt settlement damages your credit and offers no guarantees. Before enrolling, explore these alternatives:
- Credit counseling (nonprofit, protects credit score)
- Debt consolidation loan (if you qualify)
- Balance transfer credit card (0% APR for 12-21 months)
- Negotiating directly with creditors
Ready to explore your options? Get a free consultation with Pacific Debt Relief to see if you qualify or compare quotes from multiple debt relief companies to find the best fit for your situation.
Remember: The best debt relief strategy is the one you can stick with. Choose wisely.
