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- Freedom Debt Relief is a debt settlement company based in Arizona
- The company has been in business since 2002 and settled over $15 billion in debts
- To qualify for debt relief, you’ll need at least $7,500 total in unsecured debts
- The debt settlement process typically takes between 24–48 months
Freedom Debt Relief is an Arizona-based debt settlement company and a founding member of the American Fair Credit Council. Since its founding in 2002, the company has helped more than 850,000 clients settle over $15 billion in debts across 4 million accounts.
Debt settlement is one of several options consumers have when they fall behind on debts and can’t keep up with payments. Because it can be expensive and risky, it shouldn’t be your first recourse when trying to get back on track financially. However, reputable companies like Freedom Debt Relief can offer the help some consumers need to consolidate and settle debts in an affordable and timely manner.
Read on to learn more about Freedom Debt Relief and find out if it’s a viable option for you.
Freedom Debt Relief: The Basics
As a debt settlement company, Freedom Debt Relief negotiates with creditors on your behalf to establish a payment agreement for less than what you owe. When you initially reach out, you must complete a debt assessment program to determine if your debts are eligible for settlement. Freedom Debt Relief also provides a free consultation to help you decide whether debt settlement, bankruptcy, credit counseling, or debt consolidation loans are suitable options for you.
If you decide to proceed, Freedom Debt Relief will work with you to create a debt settlement strategy and begin negotiating with your creditors. During the process of negotiation, Freedom Debt Relief will have you pause payments to creditors and instead deposit funds into a dedicated, FDIC-insured account. You own this account, and there’s no loan involved in the process.
As Freedom Debt Relief reaches agreements with each of your creditors, you’ll be asked to agree to each settlement. Once you sign off, Freedom Debt Relief will make payments to your creditors from your dedicated account.
Freedom Debt Relief specializes in settling credit cards, personal loans, medical bills, and other unsecured debts. It doesn’t offer settlement services for secured debts such as mortgages or auto loans, which are tied to specific collateral. The company can assist with some private student loans but doesn’t help with federal student loans.
To enroll, you typically must have at least $7,500 in unsecured debts, though this number may be higher in some states. Usually, you must be behind on payments or facing some type of financial hardship that’s making it difficult for you to pay off your debts.
Costs and Fees
Like other debt relief companies, Freedom Debt Relief is a for-profit enterprise. That means it charges fees for negotiating more manageable debt payment plans with your creditors. The company advertises that these fees range from 15% to 25% of your total negotiated debt, but the average reported settlement fee is around 23%. You won’t pay any portion of this fee until each of your debts is settled, and you begin making payments on them.
Besides the settlement fee, you’ll also have to pay account setup and servicing fees to Crossroads Financial Technologies, the company with which you’ll set up your dedicated account. There’s a $9.95 setup fee and a $9.95 monthly fee associated with your account, but you own all the funds in the account until you use them to pay off your debts.
Debt Settlement Time Frame
Overall, Freedom Debt Relief claims to be able to resolve most eligible debts within 24–48 months. The total time frame for selling your debts depends on how much you owe, how many creditors are involved, and whether your creditors are open to negotiation. You can track your progress through Freedom Debt Relief’s online dashboard.
Freedom Debt Relief Customer Service and Reputation
The debt settlement process can be quite stressful, so it’s important to work with a company that will walk closely with you throughout the process. Overall, Freedom Debt Relief has a reputation for excellent customer service and responsiveness to customer needs.
The company has a 4.6 out of 5 rating on Trustpilot and an A+ rating on the Better Business Bureau (BBB). Besides its responsive staff, its online dashboard is noted as a strong feature. The dashboard allows clients to track their progress in real time to keep up with their debt repayment plan.
That’s not to say Freedom Debt Relief has a perfect score, however. On the BBB, the company has received 356 complaints over the past three years. Freedom Debt Relief is quick to respond to complaints, and it appears that many of the issues have been resolved.
The biggest knock against the company was a 2019 lawsuit filed by the Consumer Financial Protection Bureau. The lawsuit alleged that Freedom Debt Relief charged fees in advance and for services it hadn’t provided, failed to inform consumers of their rights, and misled clients about its ability to negotiate with all creditors. The company agreed to pay a $5 million civil penalty along with $20 million in restitution payments to affected customers.
The Risks of Debt Settlement
Debt settlement programs can have a significant negative impact on your credit scores. Payment history is one of the most important components of your scores, and because you’ll stop making payments for a time during negotiation, you may see your scores take a significant drop. There’s also a risk that creditors will grow impatient and sell your debt to a third-party collection agency or charge it off entirely, both of which can further damage your credit score.
In the short term, this drop may affect your ability to qualify for new loans. However, as you begin to pay off your debts, your scores will gradually improve, putting you in a better financial position eventually.
It’s also important to note that the IRS usually considers canceled debt as taxable income, so you may owe taxes on some of your settled debts. In some cases, creditors or debt collectors may also attempt to file lawsuits due to the lengthy process. Be sure to consult a lawyer and tax professional for advice before agreeing to any settlements.
Debt Settlement Alternatives
If you’re in over your head with debt, working with a debt settlement agency isn’t your only option. You should consider all alternatives, including:
- Credit counseling: Nonprofit credit counseling agencies can provide independent counseling to help you create your own plan for getting out of debt.
- Debt management plans: Credit counseling agencies may recommend this as a less expensive and less risky option, in which they’ll help you negotiate payment agreements and lower rates without stopping your payments entirely. This can also do less damage to your credit.
- Debt consolidation: With this debt relief option, you’ll take out a loan to pay off several existing debts at a lower interest rate. By reducing your rate and consolidating everything into one monthly payment, you can pay off your debt more quickly and effectively. However, if you already have bad credit, it may be difficult to qualify.
- DIY debt settlement: You can, of course, negotiate with each of your creditors individually. In many cases, you can negotiate rate reductions or lower minimum payments, and you won’t have to pay debt settlement fees.
- Bankruptcy: Chapter 7 bankruptcy can offer a much faster way to wipe debts clean and get a fresh start. However, this goes on your public record and can do longer-term damage to your credit score, so it’s important to seek legal consultation before going this route.
Final Thoughts on Freedom Debt Relief
Freedom Debt Relief is a legitimate debt relief service with a strong reputation for responsive, dedicated customer service. It makes debt settlement available even to consumers with a small total debt amount of only $7,500, something many of its competitors can’t say. Overall, it’s one of the best options on the market for debt settlement.
That said, you should always give careful consideration to all your options before you seek out a debt settlement agency. Debt settlement can be expensive and time consuming, and your credit can take a big hit in the process. Discuss your options with a lawyer or professional financial advisor before you get started.