Freedom Debt Relief Review: Pros, Cons & Legitimacy

Those who feel stuck in an endless debt cycle might look to filing for bankruptcy as a way to break free. However, most finance pros agree this should be a last resort. So, what can you do if you are barely getting by trying to keep up with payments, and your financial situation is just getting more and more bleak? You could try debt settlement, which is when a company like Freedom Debt Relief negotiates the amount you owe to reduce your debt. Our Freedom Debt Relief review will help you decide if this is the right step for you. 

What Is Freedom Debt Relief?

Freedom Debt Relief is a debt settlement company that has been around since 2002. It says it’s helped more than 1 million people settle over $20 billion in debt. It does this through a process called debt settlement (or debt resolution). 

Debt settlement is when a company like Freedom Debt Relief negotiates with your creditors on your behalf to reduce the amount you owe. You can also do this process yourself, but it can be time consuming. 

It does this specifically for unsecured debt like credit card debt, medical bills and personal loans. Secured debt is debt that involves collateral like your house or your car. You also must be facing financial hardship like a reduction in income, job loss, medical bills, divorce, and other unexpected expenses or emergencies. For example, if you get laid off around the same time you get the bill for an emergency room visit and you can’t make the payments, you’d be a good candidate. Someone who isn’t a good candidate is someone who can make payments on a personal loan they took out recently, but they would just like to pay less. 

It may seem too good to be true, but there are also some drawbacks to consider before pursuing debt settlement. More on those later. 

How Does the Program Work?

You can do a free consultation with them first to make sure debt settlement is the best option for you. If you do decide to enroll in its program, you won’t pay any upfront fees. You only pay if your debt is successfully settled. 

You’ll then stop making your payments to your creditor. Instead, that money goes into what Freedom Debt Relief calls your “dedicated” account, which you control (and pay a $9.95/month fee to keep open). Once there’s a certain amount of money in the account, Freedom Debt Relief’s negotiators will try to negotiate a lump-sum settlement to pay off your debt for less. (We use the term “try” because it’s not a guarantee your creditor will agree to settle.) These types of programs typically take around two to four years.

Who Qualifies for Freedom Debt Relief?

You would be a good candidate for Freedom Debt Relief’s program if: you have at least $7,500 in unsecured debt, you’re facing financial hardship that’s making you unable to make payments and you’ll be able to put money into the dedicated account. It names things like divorce, job loss and medical bills as financial hardship. 

Remember that this solution isn’t for secured debts like mortgages and car loans or federal student debt. 

What Does It Cost?

Initially, it costs nothing. You can get a free consultation and if no settlement is reached, you won’t be charged any fees. 

But if the creditor agrees to settle and you accept the offer, you’re charged 15%-25% of the total debt enrolled after you’ve made your first payment toward the settlement. That cost doesn’t include any taxes on the forgiven debt, which the IRS considers income in most cases. Your creditor will send you a form to file at tax time if your forgiven debt surpasses $600.

Pros and Cons at a Glance

These are some of the potential pros of using debt settlement and Freedom Debt Relief. 

• There are no upfront costs, and if no settlement is reached you won’t pay
• How much you owe could be reduced
• It could help you avoid bankruptcy

There are a few cons that you should consider carefully. 

• You are agreeing to stop paying your creditor, so your credit score will very likely drop. Creditors could also sue you for this
• You’ll most likely owe taxes
• Collection calls may continue during the program
• There is no guarantee your creditors will settle. So you could end up behind on payments while owing the same amount

Is Freedom Debt Relief Legit and Trustworthy?

Freedom Debt Relief is a legitimate, BBB-accredited business with an A+ rating. It also has a 4.6 rating on TrustPilot and BBB review ratings average out to 4.44. Positive reviews say agents are professional and helpful, and they have successfully negotiated down some debt. Negative reviews say that not making payments resulted in legal action and their credit was damaged. So it will be important to understand the risks before pursuing debt settlement.

How It Compares to Other Debt Relief Options

You do have other options if you don’t think debt settlement is right for you. 

Credit counseling is when you get help with how to pay off your debt. It’s not as risky, but it won’t reduce your debt. 

You could also use a debt consolidation loan. These are beneficial because they allow you to pay off multiple high-interest debts then pay back one loan at a potentially lower interest rate. This also won’t reduce your debt, but it can help you save on interest and simplify your debt. Balance transfer cards are also an option if a break on interest would get you where you need to be. These cards allow you to transfer existing debt to them and have a 0% APR period where you won’t have to worry about interest. 

Filing for bankruptcy could get your debt discharged or allow you to repay it under new terms. However, it has long-lasting negative effects on your credit and you could lose some of your assets.

Freedom Debt Relief Review: Is It Right for You?

Freedom Debt Relief and debt settlement are best for those who have a high amount of unmanageable, unsecured debt. If the debt that’s plaguing you is mostly federal student loans or your car payment, consider other options. It’s also wise to look into other avenues if you’re able to make payments, even if it’s stunting your financial growth. Because you risk damage to your credit, and even lawsuits from creditors, it’s best for people who are experiencing extreme financial hardship.

FAQs About Freedom Debt Relief