Accreditations:
AFCC, IAPDA
Is Nonprofit:
No
Time in Business:
20 Years
Experience and Accreditations
As an accredited debt relief company, Freedom Debt Relief has over 17 years of experience in the debt settlement
industry.
It has settled over two million accounts since its founding and regularly settles over 50,000 accounts monthly.
In fact, Freedom Debt was one of the founding members of the American Fair Credit Council (AFCC), which now accredits other debt relief companies and sets the standard for best practices in the credit advocacy industry.
The company is also a platinum member of the International Association of Professional Debt Arbitrators.
Freedom Debt Relief has years of experience standing between the creditor and the client. FDR will work to obtain settlements that resolve credit card debt (or any type of unsecured debt,
such as personal loan debt or medical debt).
FDR will walk clients through the debt settlement process: first, customers will voluntarily choose to stop making monthly payments to lenders. Instead, clients will elect to make a monthly deposit into a separate special purpose account to save money to pay for the settlements once negotiated.
Freedom Debt Relief will then work to negotiate a settlement on behalf of its clients.
Unfortunately, this settlement process will affect your credit score.
If you miss any minimum payments on your credit card or other debt, this will decrease your credit score.
A four-year study by Freedom Debt Relief found that its customers' credit scores dropped in the first six months
of the debt settlement program, then began to recover. According to the study, most customers' credit scores
recovered to their previous position by the time they completed the Freedom Debt Relief program.
It's smart to have a plan for boosting your credit score before you start the debt settlement process.
The graph below shows Freedom Debt Relief's customers' credit scores over time as they improve their debt through the company's program.
How does Freedom Debt Relief work?
Freedom Debt Relief doesn't charge an upfront fee or any other fees until after debt is settled with creditors.
This practice is standard for the industry.
Debt relief companies, like National Debt Relief and Pacific Debt, also do not have upfront fees.
Upon enrollment, customers will open an FDIC-insured bank account that the client controls.
Clients will put all of their money that would have gone toward paying their debt into this bank account instead.
This is the main reason why this program hurts your credit score more than debt consolidation.
Next, FDR or its representatives or agents will negotiate with your creditors to settle on debt to pay.
Freedom Debt Relief makes money by charging fees on the enrolled debt amount. Its average fees are a bit high (around 22 percent fees on enrolled debt),
but its services are thorough.
The company's ability to help clients find an easier road to financial freedom and paying off debt is highly valuable.
Should I have any concerns about Freedom Debt Relief?
Limited Availability
Freedom Debt Relief offers debt settlement programs in only 40 states. If Freedom Debt Relief does not offer its debt relief program in your state,
you'll have to consider other debt settlement companies.
Most debt settlement companies have a minimum debt requirement to ensure a payout.
A debt settlement company that charges by saved debt will not run into this problem as much.
Freedom Debt Relief requires a minimum debt amount of $7,500 (the amount of which is charged fees between 15 and 25 percent). While this threshold is low compared to other debt settlement companies,
it does rule out people struggling with lower debt amounts.
An additional limitation with Freedom Debt Relief is that the company only works with debtors with unsecured debt.
Freedom Debt Relief is not an option for those struggling with secured debt.
The difference between unsecured and secured debt is that unsecured debt is not backed by assets or collateral,
while secured debt is.
Limited Services
Some debt relief agencies provide services outside of debt settlement, such as credit counseling,
advocating for a lower interest rate on your debt, or debt management plans.
However, Freedom Debt Relief does not offer these services.
As such, if you choose to go with Freedom Debt Relief to help you work toward resolving your debt,
be aware that you will be signing up for a debt settlement program,
and may still receive calls from a debt collector or face the risk of a negative impact on your credit score.
Consumer Financial Protection Bureau Lawsuit
In 2019, the Consumer Financial Protection Bureau and Freedom Debt Relief reached an agreement
that FDR would do the following:
- Make it clear that in some cases, FDR may not be able to negotiate a debt if the creditor is unwilling to negotiate
- Let consumers know that, in some cases, the creditor will only negotiate if the client is also directly involved in the negotiations,
and that the consumer has the right to refuse to participate in the negotiations and can remove the debt from their program without penalty
- Make it clearer to consumers under what circumstances they will be charged a fee
- Stop charging fees on all accounts where the settlement amount was not reduced, or where the creditor wrote off the debt on their own
- Make it clearer to consumers that, if they end their program early, any money left in their program savings account belongs to them,
minus any funds earned by the company according to legal statutes
- Pay restitution money to injured consumers
- Pay a civil penalty
It's a good idea for potential clients to do some research on the process, consumers' rights,
and industry standards for settlement companies
before setting up a free consultation with a debt settlement service. It's also recommended
to read recent customer reviews to get a better sense of Freedom Debt Relief's commitment to clients
and how good its settlement services are.
