Freedom Debt Relief Review: Settle Debt With Some Trade-Offs

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Debt Relief

• Free debt evaluation
• No fees to sign up
• One monthly payment
• You approve settlement offers
• May lower or eliminate your debt

• No guarantee of debt settlement
• Credit will likely take a significant hit
• Creditors may sue you
• 15% – 20% settlement fee
• Monthly program fee
• Some creditors won’t negotiate
• Can’t settle tax or student loan debt
• Potential income tax on settled debt

Freedom Debt Relief (FDR) offers a debt settlement program that helps you negotiate with creditors to reduce the total you owe. With over $18 billion in resolved debt and more than 20 years of experience, FDR has supported a million clients in managing unsecured debt. 

It may provide significant debt relief, but this program comes with potential risks, including impacts on your credit and fees that can add up.

Is Freedom Debt Relief legit or a scam? 

Freedom Debt Relief is a legitimate debt relief company, with many customer reviewers reporting that the company successfully negotiated lower debt amounts. However, it’s worth noting that many positive reviews on Trustpilot are labeled as “invited” reviews, meaning Freedom Debt Relief prompted customers to leave feedback. This is a common practice, but it can sometimes lead to overly positive responses that don’t always reflect typical customer experiences.

Freedom Debt Relief has also faced legal action for certain past practices. In 2019, the Consumer Financial Protection Bureau required the company to pay $20 million in restitution to affected customers, plus a $5 million civil money penalty. The lawsuit alleged that Freedom Debt Relief charged customers without settling their debts, and in some cases, it charged for negotiations customers handled themselves. The suit also claimed that customers were misled about fees and Freedom Debt Relief’s ability to negotiate with all creditors.

On the platforms below, while many reviewers reported successful debt settlements, others highlighted concerns such as high fees they felt were insufficiently disclosed, delays in settlements, customer support issues, and lawsuits from creditors during the negotiation process.

Platform	Rating	Number of reviews
Better Business Bureau	4.48/5	1,914
Trustpilot	4.6/5	44,545
Google	4.7/5	504

How does Freedom Debt Relief work? 

To find out whether Freedom Debt Relief may be an option for negotiating settlements with your creditors, choose your debt amount and click “Continue” on the FDR website. 

Select which state you live in and fill in your name, phone number, and email address. Then click “See results.” If it shows you may be eligible for the program, call 833-418-3210 to speak with a debt consultant.

If you join Freedom Debt Relief, you’ll make monthly deposits into a dedicated account to fund potential settlements. During this time, your debt consultant will advise you to stop payments to creditors selected for settlement, which can damage your credit and may lead to lawsuits.

Stopping payments aims to motivate creditors to accept a lower settlement. Once your account balance is sufficient, FDR will use those funds to negotiate with creditors, though there’s no guarantee of settlement or timeline.

If a settlement is reached, you must approve it before it’s finalized. FDR charges a fee of 15% to 20% of the enrolled debt amount—so if you owe $10,000 and settle for $5,000, a 20% fee on the enrolled amount would cost you $2,000, totaling $7,000 with $3,000 saved. A $9.95 monthly fee applies for managing your account. Consider these fees before enrolling.

FDR cannot negotiate certain debts, including:

• Taxes
• Lawsuits
• Federal student loans
• Utility bills
• Secured loans

If you owe a tax debt, other personal finance companies may help you negotiate or settle it.

Is Freedom Debt Relief worth it? 

Freedom Debt Relief may be worth considering if you’re behind on payments and struggling with poor credit, but it’s a risky choice with no guarantee of success. The program often requires you to stop creditor payments, which will likely damage your credit. Settled debts also stay on your credit report for up to seven years and may be taxed by the IRS as canceled debt.

Before enrolling, explore alternatives. If you have good credit, transferring debt to a 0% APR credit card for 12 to 18 months could allow you to pay it down interest-free. Consolidating with a lower-interest personal loan may also help you avoid harming your credit.

If you decide to pursue FDR, read all the terms carefully, understand all fees, and know the potential credit impact before committing.

Alternatives to Freedom Debt Relief 

If you’re considering Freedom Debt Relief but want to explore other options, here are a few alternatives that may suit your needs:

1. National Debt Relief: Similar to Freedom Debt Relief, National Debt Relief specializes in debt settlement. It may be a solid option for individuals with substantial unsecured debt of at least $7,500. National Debt Relief negotiates with creditors to reduce your total debt amount, offering flexible payment plans tailored to your financial situation.
2. Accredited Debt Relief: Accredited Debt Relief works with a network of debt settlement companies, offering various debt relief programs. It’s known for its personalized approach and works with clients carrying significant unsecured debt. Accredited Debt Relief may be suitable if you want a customized program that focuses on reducing monthly payments and total debt.
3. DIY debt settlement: This option is available for those who prefer to manage their finances independently. This approach requires contacting creditors to negotiate lower payoffs. While it takes time, persistence, and negotiation skills, it can save on fees associated with professional debt relief services.
4. Debt management plan (DMP) through a credit counseling agency: A DMP might be ideal if you need a structured repayment plan without reducing the principal balance. Many nonprofit credit counseling agencies offer DMPs, which involve negotiated interest rate reductions and consolidated monthly payments. Unlike debt settlement, a DMP focuses on making debt more manageable with less damage to your credit.
5. Debt consolidation loan: If you have good credit or assets, a debt consolidation loan can combine your debts into a single monthly payment at a lower interest rate. Many financial institutions offer these loans, and it’s an excellent alternative if you prefer to pay off your debt without settlement-related credit impacts.

FAQ 

Will working with Freedom Debt Relief hurt my credit?

Yes, working with Freedom Debt Relief can damage your credit score. Debt relief programs often require you to stop making direct payments to creditors, which may lead to late payment marks on your credit report. However, as debts get settled and balances decrease, your score should begin to recover.

How long after working with Freedom Debt Relief is my credit ruined?

The effect on your credit varies depending on your situation and the debts settled, but a debt relief program’s credit impact may last two to four years. As settled accounts age, their effect on your credit score diminishes, especially as you start to rebuild with a positive payment history.

How long does it take for Freedom Debt Relief to settle my debt?

Freedom Debt Relief’s programs generally take 24 to 48 months. The exact timeline depends on factors such as the amount of debt, the number of creditors involved, and how fast you can save funds for settlements.

Is there a minimum amount of debt I need to work with Freedom Debt Relief?

Yes, Freedom Debt Relief requires a minimum debt balance of $7,500. This threshold ensures that clients benefit from the service because smaller debt amounts might be better managed through other means.

What happens if I drop out of the Freedom Debt Relief program?

If you exit the FDR program early, any remaining debts that weren’t settled will still be due, likely with accrued interest and fees. Your creditors may resume collection efforts, which could include late fees, interest charges, and even legal action. Any progress you made on debt reduction may be lost, and your credit may already be affected by missed payments while in the program.

Exiting the program can also mean you forfeit some of the funds saved in your dedicated account, and you might not get refunds for any fees paid. If you’re considering leaving the program, review the terms and consider speaking with a financial advisor about alternative debt solutions.