If you’re struggling with debt, you may be considering a number of debt relief options. One widely known debt settlement company is Freedom Debt Relief.
But should you turn to Freedom Debt Relief to settle your debt? To make your decision, it will be important to know how the process works, what it’s like to work with this company, as well as to read Freedom Debt Relief reviews from other consumers.
What is Freedom Debt Relief?
Freedom Debt Relief is a debt settlement company that works with consumers with more than $7,500 in unsecured debt to lower their total amount of debt. Founded in 2002, the company works with consumers with credit card, medical, personal loan, and department store credit card debt. The company recommends enrolling any of these unsecured accounts with a balance of at least $500 in their program. However, the company cannot work with federal student loan debt, mortgages, auto loans, utility bills, taxes, and lawsuits. Freedom Debt Relief says their program takes about 24-48 months and is based on the client’s budget.
How does debt settlement work?
The process of debt settlement involves an individual or a debt relief company, in this case, Freedom Debt Relief, negotiating with a creditor for an amount less than the balance owed. The borrower often must be delinquent on their debt. The creditor must feel as if a settlement is the only way at least some of the debt will be recouped. Creditors may also be more likely to settle if the borrower can prove financial hardship. Many individuals struggling to pay their debt turn to debt settlement companies. Professionals will have existing relationships with creditors and more effective negotiation strategies. Many individuals turn to Freedom Debt Relief because they have heard or seen their advertisements.
With debt settlement companies, including Freedom Debt Relief, consumers generally make a monthly payment to the company. The company will then negotiate with creditors on the client’s behalf. Once a settlement is reached, the company will use the funds from the client’s monthly payment to pay off the settlement.
Debt settlement can help you avoid bankruptcy and get your finances back on track. While your credit may dip while going through the process, it will ultimately rise again once your debts are settled.
What Should You Know About Freedom Debt Relief?
Many clients who have worked with Freedom Debt Relief and reviews of the company have mentioned that they felt more like a number than a human being during the process. Because Freedom Debt Relief is such a large company, clients generally don’t have an assigned professional working on their account. Instead, clients are typically contacting a call center. This can be a frustrating process where the client doesn’t feel valued.
While Freedom Debt Relief can’t legally charge fees upfront, they will charge between 18-25% of your enrolled debt once a settlement has been reached. The amount charged may depend on the state you live in. The company also charges a one-time setup fee and a monthly maintenance fee. Many debt relief companies like Freedom Debt Relief also have pre-determined interest rates on which they negotiate settlements, rather than settling interest-free.
Additionally, if a client is sued for debt, Freedom Debt Relief doesn’t have in-house attorneys. In many cases, they use third-party counsel or put the onus on the client to find representation. This can make the legal process challenging for the client.
Freedom Debt Relief was sued by the Consumer Financial Protection Bureau in 2017. The CFPB alleged that the company was charging clients without settling their accounts, making clients negotiate their own settlements, and misleading clients about cost. Freedom Debt Relief settled the lawsuit in 2019, paying $20 million in restitution to clients and paying a $5 million civil penalty.
The company has a B- rating with the Better Business Bureau and has received 350 customer complaints on the site in the past three years. Most of these negative reviews center around billing and collection issues.
What Should You Look for in a Debt Settlement Company?
When settling your debt, you deserve to be treated like an individual and to speak to a real person. You should be confident that the person you’re speaking to has a thorough understanding of your account and will know the best solution for your situation. Every client’s circumstances will be different, and you should be treated accordingly. The debt settlement company shouldn’t make you unrealistic promises about specific settlement amounts or timelines.
Additionally, working with a firm that does legal work in-house can be beneficial. If you do get sued for your debt, having a firm with its own legal representation can help ease the burden on you. A debt attorney who is already familiar with your situation can help you navigate the confusing and intimidating legal process.
Debt settlement companies should also be upfront about their pricing. Settlement agreements should be interest-free and you shouldn’t be charged a monthly maintenance fee.
What Other Debt Relief Options Do You Have?
Debt settlement is not the only way to get your debt under control. Debt consolidation is another common method of debt relief. Consolidation doesn’t diminish the amount of debt like debt settlement does. Instead, it puts all of your debts into one place with one interest rate. This could lower your average interest rate, meaning you would pay less over time. It can also help simplify your payment process, because you’ll only be making one payment. Using a balance transfer card is a similar process in that you can move your debt onto a new card, generally with a lower interest rate or a zero-percent introductory period.
Bankruptcy is also a debt relief option, but it should generally be considered a last resort. While bankruptcy can wipe your debts clean, its effects can plague your financial situation for years to come. There are essentially two different types of bankruptcy for consumers. Chapter 7 bankruptcy wipes out all of your debt, while a Chapter 13 bankruptcy serves as a repayment plan. Bankruptcy can stay on your credit for up to 10 years. That can have far-reaching detrimental effects on your ability to be considered a good borrower in the future. Working with the right company that has your best interest in mind and can give you options to pay your debt, save you money, and limit the impact to your credit can help you avoid bankruptcy.
Determining which debt relief method is right for you depends on your personal situation. It will depend on the amount of debt you have, your resources to make payments, and the debt’s impact on your overall well-being, among other factors. A financial professional can help you decide which route works best for you.
The Bottom Line
Before determining your debt relief path, it’s important to understand all of your options. First, you will need to determine whether debt settlement is the right choice for you. From there, you will have many choices of debt relief companies to work with. Consider what you’re looking for in a debt relief company. Factors such as reputation, firm size, personalized attention, payment structure, and legal representation all may play a role. Ask for referrals or advice from other financial professionals you work with, such as your financial advisor or accountant. Read online reviews to compare companies like Freedom Debt Relief. Remember that a reputable company will allow you to speak to a real person, even a licensed attorney, at no charge.
At Tayne Law Group, P.C., our process is also tailored specifically to you. We know that your situation is completely unique to you. We’re not a cookie-cutter, one-size-fits-all firm. As a result, you can be confident that we’re working to find the solution that will be best for you. If you’re struggling with debt and don’t know where to turn, the team of experienced professionals at Tayne Law Group is here for you.
Call us for a free consultation at 866-890-7337 or fill out our short contact form and we’ll get in touch!