Freedom Debt Relief Review | Money

Freedom Debt Relief is one of our top picks for the best debt relief companies. The firm offers debt settlement programs to borrowers dealing with overwhelming credit card debt and other unsecured debt.

While you can negotiate debt settlements on your own, one of the benefits of working with a reliable debt relief company is that it can reduce the time you spend dealing with creditors. And since these companies have experience working with creditors, they may be able to secure a larger reduction in your debt balance (though the fees will reduce your overall savings).

Freedom Debt Relief (FDR) is one of the largest companies in the industry. According to a company spokesperson, FDR has settled more than $19 billion in debt for over 1 million clients since 2002. The company also reports that over two-thirds of its clients get their first settlement offer within three months.

Freedom Debt Relief Overview

There are other drawbacks to be aware before you consider debt relief. These apply to the whole industry, not just Freedom Debt Relief, but they are important enough to call out here:

• You cannot negotiate on unsecured debt such as auto loans and mortgages or on federal student loans.
• There’s no guarantee that creditors will be willing to work with the debt relief company — any company that promises it can settle all your debt is a red flag.
• Depending on your existing credit, you could see your credit score drop during the debt settlement process since it typically requires you to miss payments. If you are current on your payments, creditors don’t have an incentive to settle.

Freedom Debt Relief Services

Freedom Debt Relief negotiates with creditors to reduce what you owe and agree on a debt settlement — typically a one-time, lump sum payment — on your behalf. The company also offers a range of debt and money management resources.

When you sign up for Freedom Debt Relief’s program, an advisor from the company will offer you an initial financial evaluation free of charge to discuss options and determine whether debt relief is an appropriate path. (If the company’s program isn’t the best fit for a particular customer, Freedom Debt Relief may refer them to partners who specialize in other types of debt solutions such as debt consolidation, credit counseling and bankruptcy.)

If you do enroll in FDR’s debt relief program, the company will run a detailed cash flow assessment. This allows them to recommend a monthly deposit amount that you can afford based on your current finances. You’ll deposit that amount into an account to build up funds for any possible settlements.

In keeping with Federal Trade Commission (FTC) rules, Freedom Debt Relief doesn’t charge upfront fees. Instead, it takes a cut of the final settlement it negotiates with your creditors as payment. Freedom Debt Relief also offers its clients a program guarantee: If the total amount of settlement is more than the total amount of debt a client enrolled in the program, FDR will refund the difference.

While enrolled, clients have access to an online dashboard to track their debts and the balance in their savings accounts, as well as access to customer service seven days a week. There’s also a mobile app where clients can quickly review and approve settlements as they come in.

Requirements to qualify

Freedom Debt Relief only works with borrowers who have at least $7,500 or more in unsecured debt, such as credit cards, medical debt, personal loans, private student loans and payday loans. The company may also help with some business debts on a case-by-case basis.

The candidate must also be experiencing some form of financial hardship that’s making it hard to pay unsecured debt such as credit card bills, medical bills or personal loans. Examples of financial hardship include unexpected medical issues, divorce, unexpected expenses and job loss or reduced income.

Cost

You can expect to pay a service fee ranging from 15% to 25% of the enrolled debt. For example, if you have a $15,000 credit card debt, the fee could range from $2,250 to $3,750, depending on the length and complexity of the negotiation.

Freedom Debt Relief will charge this fee after the debt is negotiated, the settlement is approved and the client makes the first payment. Before the company settles each account, it will contact the client to authorize the settlement and the associated service fee.

Clients also have to pay a one-time $9.95 fee to set up a dedicated account where you will accumulate debt settlement funds. Once you pay the setup fee, there is an additional $9.95 monthly to service the account.

Company credentials

• Founding member of the American Association for Debt Resolution (AADR), which promotes and upholds best practices in the debt settlement industry. During the AADR accreditation process, an independent third-party auditor reviews the member companies’ compliance with federal and state laws and the AADR’s industry standards.
• Member of the International Association of Professional Debt Arbitrators (IAPDA).
• FDR’s debt consultants are certified by the International Association of Professional Debt Arbitrators (IAPDA), a nonprofit organization that provides education and training resources to industry professionals.

Customer satisfaction

• Trustpilot: 4.6/5 star rating, based on over 44,000 reviews
• Better Business Bureau (BBB): A+ BBB Rating and an average of 4.5/5 stars, based on 1,900+ customer reviews
• Google Reviews: 4.7/5 star rating on Google Reviews, based on 500+ reviews

Availability

• Freedom Debt Relief is authorized to do business in the following states: Alabama, Alaska, Arizona, Arkansas, California, Delaware, Florida, Iowa, Idaho, Indiana, Kentucky, Louisiana, Massachusetts, Maryland, Michigan, Minnesota, Mississippi, Missouri, Montana, North Carolina, Nebraska, New Mexico, Nevada, New York, Oklahoma, Pennsylvania, South Dakota, Tennessee, Texas, Utah and Wisconsin.
• Additional states require that consumers obtain these services from a law firm. Freedom Debt Relief provides debt settlement services through legal partners in Connecticut, Georgia, New Hampshire, New Jersey, Illinois, Kansas, Maine, Ohio, South Carolina, and Virginia.
• The company doesn’t offer debt settlement services in: Colorado, Hawaii, North Dakota, Oregon, Rhode Island, Vermont, Washington, West Virginia, Wyoming.

What to know about the debt settlement industry

Debt relief can be tricky to navigate alone. Consumers have to negotiate with creditors who have a vested interest in persuading them to pay the highest amount possible. So, many people engage the services of a debt relief agency for this task.

But debt settlement isn’t a surefire solution. For starters, not all debt is eligible, just unsecured debt including credit card debt, medical debt, personal loans or department store debt. You’ll need to consider other solutions if you are struggling with federal student loans, your mortgage or your car loan.

There is also no guarantee that a debt settlement company will be successful in negotiating your debt. A creditor may outright refuse to work with a debt settlement company or renegotiate your debt. One study on the financial outcome of debt settlement programs found that 74% of borrowers successfully settle at least one account within three years starting a debt relief program. But that also means that 26% weren’t able to settle a single account.

You should also keep in mind that interest and fees still accumulate while the company negotiates for you, so your debt balance often grows. And missing payments can hurt your credit score.

Know that debt relief companies are not your only option for dealing with debt. Other options include:

• Consumer credit counseling: Consulting with a nonprofit credit counseling organization can be a good first step. These organizations offer free financial evaluations to identify the best way to tackle your debt. If your debt is eligible, a credit counseling company may also offer to enroll you in a debt management plan for a monthly service fee. Through this program, the company will negotiate a lower interest rate with your creditors and create a new repayment plan that fits your budget.
• Debt consolidation programs: This is an option for people who have several debts with different creditors and have good enough credit to qualify. A debt consolidation loan combines everything you owe into one account and gives you a single monthly repayment amount.
• Bankruptcy: If you have no other recourse, bankruptcy is another option. This is a legal process through which borrowers can either eliminate some of their outstanding debt or renegotiate a new plan to pay it off over time. However, the decision to file for bankruptcy should not be taken lightly. It will have a long-lasting effect on your credit score (the negative mark can stay on for up to 10 years), making it very difficult to get approved for new lines of credit.

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Are all debt relief companies legitimate?

Freedom Debt Relief is a legitimate debt settlement company with over two decades of experience. But not all debt relief companies have a solid and proven reputation. Always look out for these signs of potential scams:

• Asking for upfront fees: It is illegal for a company to charge fees before it has reached a settlement on your behalf and you’ve approved the settlement.
• Requiring you to stop communicating with creditors: Although debt relief companies will take over much of the communication between you and the creditor, they shouldn’t block you from speaking with creditors if you wish to contact them.
• Not explaining your legal rights: All good companies should know consumer law thoroughly and advise you on your rights if you ask.
• Speaking about a new “government program” to bail out people with debt: Unless you find information on this from another reputable source, don’t fall for it.
• Promising to protect you from any legal action: In reality, there’s always a risk that a creditor will sue you if you’re not making payments, even if you pursue a debt relief program.

You can contact your local consumer protection agency to check for negative reports about the company you’re considering before hiring its services.