Freedom Debt Relief

Is Freedom Debt Relief legit and can you get away with paying only a percentage of your debts just like that?

FDR is a real company and its debt settlement program can save you real money. The catch is your credit report will catch fire. At least that’s what it’ll look like from a lender’s point of view.

Whether or not you should go through with Freedom Debt Relief’s debt settlement program depends on a lot of factors that we’ll get into below.

Snapshot:

• Type of Debt Relief – Debt Settlement
• Eligibility & Requirements – Minimum amount of $7,500 in unsecured debt
• Fees – 15%-25% of enrolled debt, plus $9.95 monthly service fee
• Credit score impact – Stains credit report for 7 years
• Consumer Reviews – Mixed, A+ BBB rating

How Freedom Debt Relief Works

The process begins with a conversation with a representative to ensure that you’re a good fit for debt settlement. If you qualify, you’ll start making deposits into an FDIC-insured savings account.

Freedom Debt Relief can’t begin negotiating with your creditors until you’ve saved a sufficient amount in that account, building up your leverage. Creditors typically won’t consider settling unless you demonstrate, in terms they understand, that you’re serious.

Once enough money is set aside, your debts are negotiated and, ideally, settled one by one. This phase can be messy; negotiations may take months or even years, and if a settlement isn’t reached, you’ll be responsible for repaying the full debt plus any interest and late fees that accrued during the process.

If a settlement is reached, you’ll then make regular payments to Freedom Debt Relief until all your accounts are resolved, a process that generally takes between 24 and 48 months.

Freedom Debt Relief Eligibility & Requirements

You need at least $7,500 in unsecured debts to qualify for Freedom Debt Reliefs debt settlement program. Unsecured debt means credit cards, personal loans, and medical bills. It’s debt not backed by collateral.

You need to put enough money away in an escrow account before FDR and your creditors can talk about erasing your debts. Part of your leverage comes from these savings. FDR can point to the cash you’re stowing up and say to your creditors, “look, this can all be yours if you’re willing to let our customer off the hook.”

Fees for Freedom Debt Relief

Expect to pay Freedom Debt Relief between 15% and 25% of the enrolled debt. Even though you will be making one regular payment to FDR, your accounts will be settled one by one. For instance, once FDR wraps up talks on credit card #1, it will get in touch with you so you can authorize the settlement. This is when it will process its fee, which gets tacked on to your regular payments. The process continues with credit card numbers two and three and so on until all your debts have been negotiated.

When you default, you’ll rack up late fees and interest. This means your debt amount will increase as negotiations are taking place. These can go on for months before a settlement is reached.

When considering its take in terms of fees, Freedom Debt Relief assumes your loan amount will increase during negotiations and it incorporates that into the fees it charges. This means if you came into the program with $10,000 in debt, FDR won’t take 15-25% of your $10,000. They will come up with an estimate of how much they think your interest and fees will run up your debts by the end of the negotiation period. Their percentage comes out of that estimate.

Pros & Cons of Debt Settlement with Freedom Debt Relief

The best way to know if Freedom Debt Relief is for you is to weigh the pros against the cons and see if the benefits make up for the consequences.

Pros of Freedom Debt Relief

• Significant Debt Reduction: You may be able to reduce your total unsecured debt by up to 50%, depending on your creditors and the settlement terms.
• Faster Path to Debt Free: Debt settlement typically resolves debts within 24 to 48 months, much faster than making only minimum payments.
• Alternative to Bankruptcy: Settlement can help you avoid filing for bankruptcy, which has longer-lasting credit consequences and potential legal stigma.
• Legal Support for Eligible Clients: Some programs offer access to legal counsel for clients facing lawsuits or aggressive collections, providing added protection.
• Professional Negotiation: Experienced negotiators work with creditors on your behalf to reach reduced payoff amounts.

Freedom Debt Relief’s main pull is the shot at clearing away a chunk of your debts. It may also give you a break from all the intrusive phone calls from creditors or debt collectors desperate to collect. FDR sticks out from similar debt settlement companies by offering legal advice and possible representation.

When you default on a loan, creditors may sue you to get their money. Freedom Debt Relief partners with a network of attorneys to help provide counsel to its clients. The cost is included in the service, but if things advance to court, the client may have to pay for court fees and costs. If you want to qualify for legal representation make sure to have all your escrow deposits up to date.

Cons of Freedom Debt Relief

• Damage to Credit Report: The fact that you didn’t pay the full amount of the money you borrowed remains on your credit report for seven years.
• High Fees: Debt settlement can come with costly service fees that reduce your overall savings.
• Taxable Forgiveness: Any debt that is forgiven through settlement is considered taxable income by the IRS.
• No Guarantee of Settlement: There’s no guarantee that creditors will agree to settle, and certain types of debt, like student loans and tax debt, typically can’t be negotiated.
• Ongoing Collections and Legal Risk: Even while enrolled in a settlement program, creditors can still pursue legal action.

Remember, Freedom Debt Relief won’t start haggling with your creditors until you’ve put away enough in your escrow account. This alone can be a major obstacle if you’re broke. The first settlement is often reached by month four, but talks can drag on six months or more.

If you fail to complete the debt settlement program or if FDR is unable to reach an agreement with your creditors, you will be stuck with all the accumulated fees from defaulting on your credit card debts, not to mention making a mess of your credit report.

Is Freedom Debt Relief Right for Me?

Freedom Debt Relief is for consumers who have tried every debt relief option available besides bankruptcy. The truth is, even if your debts are reduced by 50%, taxes and fees will dig into your savings and your credit report will be wrecked. You may not save as much as you hope.

Now, if you’ve done the math and decided the savings are worth it, here are a few things you should know before going forward.

FDR cannot work with secured debt or federal student loans, but it may be able to work with some private student loans and certain business loans on a “case-by-case” basis. You need at least $7,500 in unsecured debt to be eligible for the program.

As we mentioned earlier, you will have to pay taxes on the forgiven debt. However, if you are insolvent (meaning you have more liabilities than assets) you may be able to get out of paying them. Speak with a professional tax consultant to see if you qualify.

Freedom Debt Relief is available in the following states:

• Alabama
• Alaska
• Arizona
• Arkansas
• California
• Delaware
• Florida
• Iowa
• Idaho
• Indiana
• Kentucky
• Louisiana
• Maryland
• Massachusetts
• Michigan
• Minnesota
• Missouri
• Mississippi
• Montana
• North Carolina
• Nebraska
• New Mexico
• Nevada
• New York
• Oklahoma
• Pennsylvania
• South Dakota
• Tennessee
• Texas
• Utah
• Wisconsin

Freedom Debt Relief works with legal partners to provide debt settlement services in the following states:

• Connecticut
• Georgia
• New Hampshire
• New Jersey
• Illinois
• Kansas
• Maine
• Ohio
• South Carolina
• Virginia

Freedom Debt Relief does not service the following states:

• Colorado
• Hawaii
• North Dakota
• Oregon
• Rhode Island
• Vermont
• Washington
• West Virginia
• Wyoming

Alternatives to Freedom Debt Relief

You don’t have to settle for debt settlement through Freedom Debt Relief. There are other debt-relief options out there, and other debt settlement companies to choose from, as well. Here are a few options to get you started.

Debt Management

Debt management helps borrowers pay off their debts in 36-60 months. You won’t get out of paying what you owe, but you may be able to cut down interest and eliminate late fees. Another plus is it won’t damage your credit report.

DIY Debt Settlement

Some companies have ongoing relationships with various lenders, which helps them reach agreements quicker, but that doesn’t mean you need them to negotiate. You can call up your creditors directly and settle your debts yourself. This way you get to pocket the bulk of your savings without paying fees, though taxes will still apply.

National Debt Relief

A similar company offering a similar service and similar fees. However, National Debt Relief nudges out Freedom Debt Relief in the customer satisfaction department. NDR has a higher BBB rating, A-plus. Compare that to FDR’s B-minus, coupled with nearly double the amount of customer complaints.

Bankruptcy

Bankruptcy should be a last resort, but it can be a good solution for people in deep financial trouble. Chapter 7 bankruptcy can erase unsecured debts like credit cards, while Chapter 13 sets up a structured repayment plan. Bankruptcy will hit your credit hard, but it also gives you a clean slate and protection from creditors.

Freedom Debt Relief Reputation & Consumer Reviews

The Consumer Financial Protection Bureau (CFPB) sued Freedom Debt Relief for allegedly violating the Telemarketing Sales Rule that prohibits debt settlement companies from charging before actually settling debts.

The CFPB also says Freedom Debt Relief charged consumers fees even when the consumers negotiated their own settlements. Fees that allegedly numbered in the thousands. Piling it on, the CFPB claimed FDR misled consumers by hiding that a lot of big banks won’t work with debt settlement companies. It claimed FDR violated the Consumer Financial Protection Act.

Freedom Debt Relief never admitted guilt over these accusations, nevertheless, on July 9^th, 2019, it agreed to pay consumers $20 million in restitution along with a $5 million civil money penalty.

Here’s a direct statement from the CFPB:

“The Bureau’s lawsuit alleged that Freedom Debt Relief violated the Telemarketing Sales Rule by charging advance fees and failing to inform consumers of their rights to funds they deposited with the company. The Bureau also alleged that Freedom Debt Relief violated the Consumer Financial Protection Act of 2010 by charging consumers without settling their debts as promised, charging consumers after having them negotiate their own settlements with creditors, and misleading consumers about the company’s fees and its ability to negotiate directly with all of a consumer’s creditors.”