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Freedom Debt Relief could be a last-ditch effort to avoid filing for bankruptcy. Customers have mostly positive things to say about its customer service team, but it’s faced several lawsuits in the past. And clients have complained that it look longer than expected — if it even worked at all.
Freedom Debt Relief is a debt settlement company that helps people with unmanageable unsecured debt get back on their feet. It was founded in 2002 by two Stanford Business School alumni to offer better options for consumers struggling with debt.
Today, it’s an industry heavyweight with a hand in creating the standards for the debt settlement industry. It’s a member of the American Fair Credit Council (AFCC) or International Association of Professional Debt Arbitrators (IAPDA), which are trade organizations that set standards for the debt relief industry.
But regulators have taken action against the company multiple times over its business relief practices.
Freedom Debt Relief lawsuits
Freedom Debt Relief has faced at least three lawsuits over the past 10 years.
The Consumer Financial Protection Bureau (CFPB) filed a suit against Freedom in 2017, accusing the company of “coaching” consumers instead of dealing with the creditors directly. In some cases, the company still charged its fee when consumers had to negotiate themselves. Freedom also did not clearly disclose to customers that had the right to the money they had set aside for settlement if they withdrew from Freedom’s program, according to the 2017 suit.
In response, the company implemented widespread consumer process and disclosure changes during and post the CFPB lawsuit.
New York lawsuit
Freedom Debt Relief settled a lawsuit with the State of New York in 2020 over how the company advertises savings. New York sued the company because it failed to disclose what percentage of customers actually finish the program with a reduced balance when it advertised potential savings.
Washington State also sued Freedom Debt Relief for charging customers fees but then failing to contact their creditors. The company agreed to a settlement in 2010.
Freedom Debt Relief reviews and complaints
BBB customer reviews
4.6 out of 5 stars, based on 3330 customer reviews
4.6 out of 5 stars, based on 31,942 customer reviews
Customer reviews verified as of
09 January 2021
Freedom Debt Relief gets mostly positive online reviews from customers. However, many are from customers who have recently signed up — rather than those who have completed the program. A top complaint is that the program took longer than expected — or may not have worked at all. Be sure to consider how debt relief could impact your long-term finances before you sign up.
How does Freedom Debt relief work?
Freedom Debt Relief ultimately works by negotiating down your balances in exchange for a one-time payment. Here’s how this typically happens:
Get a consultation. Meet with a debt specialist to make sure you’re eligible for the program and learn how to enroll.
Save up for your settlement with monthly deposits. To cover the cost of the settlement and Freedom Debt Relief’s fees, your deposits go into an FDIC-insured account that you can easily monitor online.
Freedom Debt Relief negotiates with your creditors. Once you have enough funds in your account, Freedom Debt Relief contacts your creditors to discuss a settlement arrangement. This process is delicate, tricky and can take longer than expected. It’s not uncommon for it to take several attempts before your debt is settled.
Pay your debt settlement. Freedom Debt Relief contacts you each time they reach an agreement with a creditor, asking you to authorize them to pay the settlement through your account.
Start rebuilding your credit. Debt settlement can cause your credit score to tank temporarily, though your score starts to rebuild after settlements are made.
How much does it cost?
Freedom Debt Relief charges a fee of 15% to 25% of the debt you enroll in the program. You must enroll $7,500 at a minimum — though the average customer enrolls $24,000. This works out to a fee of $3,600 to $6,000 on the average customer’s balance.
But the cost can be higher if you don’t make payments on your debt. If you stop repayments, interest and late fees will add up and increase your balance.
How much could I save with Freedom Debt Relief?
Customers can save up to 50% of their enrolled debt if they complete the program, according to the Freedom Debt Relief website. After fees, this works out to a savings of 25% to 35%.
Savings are calculated at the time that your account is settled. If you stopped making payments to your creditors, you won’t see as much in savings. And in some cases, you could end up owing more. People who drop out of the program also often end up owing more than they originally enrolled.
Debt relief companies typically charge a percentage of a customer’s debt or a monthly program fee for their services. And not all companies are transparent about these costs or drawbacks that can negatively affect your credit score. Depending on the company you work with, you might pay other fees for third-party settlement services or setting up new accounts, which can leave you in a worse situation than when you signed up.
Consider alternatives before signing up with a debt relief company:
Payment extensions. Companies you owe may be willing to extend your payment due date or put you on a longer payment plan if you ask.
Nonprofit credit counseling. Look for free debt-management help from nonprofit organizations like the National Foundation for Credit Counseling.
Debt settlement. If you can manage to pay a portion of the bill, offer the collection agency a one-time payment as a settlement. Collection agencies are often willing to accept a lower payment on your debt to close the account.
Frequently asked questions
Debt settlement in general could damage your credit score, but it can also help you rebuild your credit in the long run by clearing up some of your debts. Whether your credit score can benefit from debt relief depends on your spending habits. If you spend recklessly after settling your debt, you’ll find yourself in the same — if not a worse — position.
Not always, unfortunately. And Freedom Debt Relief doesn’t guarantee anything when you sign up. There’s always a chance that your creditors simply won’t agree to let you settle your debt, no matter how much your company negotiates. It’s often best to treat debt settlement as a last resort before filing for bankruptcy.
Follow these steps to login to your online account with Freedom Debt Relief:
Go to the Freedom Debt Relief website and click Client Dashboard.
Enter your email and password and click Client Login.
If you live in one of the following states or territories, you won’t be able to sign up for Freedom Debt Relief’s services:
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