Freedom Debt Relief Review

Our take on Freedom Debt Relief

Freedom Debt Relief can help you settle debt for less than what you owe, but your credit score will suffer during the process — and the company's services can be expensive. Treat debt settlement as a last resort for unsecured debts, and consider alternatives such as debt consolidation, credit counseling, and bankruptcy before moving forward.

How does Freedom Debt Relief work?

Freedom Debt Relief’s debt settlement program is designed to settle debt with your creditors for less than what you owe. Here’s what you can typically expect from the process:

1. Free consultation

Call to speak with a certified debt consultant by phone to discuss your options, which may include debt settlement, credit counseling, bankruptcy, or a debt consolidation loan. Keep in mind, however, that Freedom Debt Relief specializes in debt settlement and doesn’t offer other services directly.

You can also click "See if you qualify" on the website to see which options you may be eligible for based on the amount of debt you owe and proceed from there.

Note: The next steps depend on whether you enroll in the debt relief program. If you choose to pursue debt consolidation, Freedom Debt Relief may refer you to one of its affiliates that offer personal loans and home equity loans that you can use for debt consolidation. The company itself isn't a lender. 

2. Open an account

If you decide to enroll in debt settlement, you’d set up a deposit account with Crossroads Financial Technologies (CFT). Creating the account requires paying a one-time $9.95 setup fee and a monthly $9.95 servicing fee to CFT.

3. Make deposits

Instead of making your minimum monthly payments toward your enrolled debt, you’ll deposit money into the CFT account. The goal is to grow this account enough to pay off your settled debts once Freedom Debt Relief has negotiated them down. According to the company, the average monthly deposit is $427.

4. Wait for settlement offers

Freedom Debt Relief will begin negotiating with creditors and debt collectors. The goal is to get them to agree to a lower amount that you can afford to pay with the funds you’ve saved — and call the debt paid.

5. Settle (ideally)

If Freedom Debt Relief successfully negotiates one of your debts down, your representative will contact you for authorization. If you approve, you’ll use funds from your account to pay the reduced debt amount, along with Freedom Debt Relief’s fee (15% to 25% of the enrolled debt amount). If you don’t approve, you won’t pay the company’s fee.

6. Continue until all debts are settled

Freedom Debt Relief works on multiple debts at one time. Once the last debt is settled and paid, you’ll end the program. It generally takes 24 to 48 months. According to the company, the program lasts 39 months on average. However, there’s no guarantee; some creditors may choose not to negotiate.

Who is Freedom Debt Relief best for?

• Best for people in major financial hardship: If a major financial hardship like job loss or the death of a spouse has made it so that you can’t afford your minimum monthly debt payments and your credit score is already damaged, Freedom Debt Relief could provide a solution.
• Good for significant unsecured debt: Freedom Debt Relief accepts clients with at least $7,500 in qualifying debt, meaning unsecured debt such as credit cards, most personal loans, or medical debt.

Who is Freedom Debt Relief not best for?

Freedom Debt Relief isn’t for you if you:

• Have less than $7,500 in debts
• Primarily have federal student loan debt or secured debt, like a car loan or home equity loan
• Can afford your minimum monthly payments
• Are current on your accounts
• Have a fair or better credit score
• Haven’t first tried a debt management plan (DMP) with a certified credit counselor

Pros and cons

Freedom Debt Relief offers some advantages, but carefully consider the drawbacks before moving forward.

Details on the pros

• Provides a timeline for settling debt: Freedom Debt Relief says its program takes most people 24 to 48 months, or 39 months on average, to complete. This timeline is typical of most debt settlement companies.
• You may end up owing less: The goal of Freedom Debt Relief’s program is to settle your debt for less than you owe — a goal, but not a guarantee. Also, keep in mind that debt settlement fees, bank fees, and any late fees charged by your creditors could affect your net savings. This is typical of most debt settlement companies.
• Professional negotiators: Negotiating with creditors is a challenging, nuanced process. Freedom Debt Relief argues that debt settlement companies can leverage their existing relationships and contacts with creditors.
• Fees may be refunded: One area where Freedom Debt Relief stands apart from competitors is its Program Guarantee. If the total cost of your settled debt plus the company’s fees ends up exceeding the original balance of the debt you enrolled, Freedom Debt Relief offers a settlement fee refund when you finish or exit the program.

Details on the cons

• High settlement fees: Freedom Debt Relief charges between 15% and 25% of any enrolled debt that gets settled. This is typical of most debt settlement companies.
• Bank fees: Under federal law, companies like Freedom Debt Relief can't charge debt settlement fees in advance. Freedom Debt Relief doesn’t collect fees until after you accept a settlement offer and make the first payment. But there are other fees to consider, such as fees charged by the partner bank where you open an account.
• Damage to credit score: Freedom Debt Relief’s program involves putting money you would otherwise spend on debt repayments into a bank account to save up for settlement. Months of non-payment will damage your credit score, as on-time payment history is the single most important factor used to calculate your score. Your unpaid accounts will also accrue unpaid interest and fees during this time. This is a feature of all debt settlement programs and companies.
• Success isn't guaranteed: Freedom Debt Relief can’t guarantee success with its program. Some creditors may simply refuse to negotiate and could take legal action against you. If Freedom Debt Relief can’t settle a specific debt, you may have to pay the entire amount to your creditor, or try to negotiate on your own behalf. This is a feature of all debt settlement programs and companies.

How to qualify with Freedom Debt Relief

Not everyone is eligible for Freedom Debt Relief’s programs. You can call 1-800-910-0065 to speak to a consultant or check your eligibility on the company website, but you may be directed to another option if debt settlement isn't a good fit.

Here are some of the criteria to qualify with Freedom Debt Relief:

• Your debt amount: You’ll need to enroll a minimum of $7,500 in debt to qualify.
• Where you live: Debt relief services are available directly from the company or through a legal partner in every state except Colorado, Hawaii, North Dakota, Oregon, Rhode Island, Vermont, Washington, West Virginia, Wisconsin, or Wyoming.
• Type of debt: The company handles unsecured debt, including credit cards, medical bills, payday loans, private student loans and lines of credit. You can’t use Freedom Debt Relief to settle secured loans (like home equity loans, mortgages, or auto loans), taxes, utility bills, lawsuits, or federal student loans. 

Freedom Debt Relief fees

The company charges a fee when you authorize a settlement offer and make a first payment toward that amount. The fee ranges from 15% to 25% of the enrolled debt, which can vary depending on the amount of debt and the state you live in.

For instance, if Freedom Debt Relief negotiated a $25,000 debt down to $15,000, you would owe $15,000 to your creditor and between $3,750 and $6,250 to Freedom Debt Relief. 

Be aware that in the case of debts with multiple creditors settled individually, a fee would apply to each settlement.

Also, you’ll have to pay an upfront $9.95 setup fee to Crossroads Financial Technologies (CFT) to create an FDIC-insured account. You'll make deposits in this account as you save up money to settle your debt. CFT also charges a monthly $9.95 service fee. Freedom Debt Relief doesn’t receive any of this money.

If the debt relief program takes 48 months to complete, you would spend $487.55 in bank fees — the one-time $9.95 setup fee plus a total of $477.60 in monthly fees. 

Freedom Debt Relief company details and history

Freedom Debt Relief is a debt settlement company founded in 2002 and based in San Mateo, California. According to the company, its debt consultants have helped more than 1 million customers resolve over $20 billion in debt.

Freedom Debt Relief is a founding member of the Association for Consumer Debt Relief (ACDR) and a platinum member of the International Association of Professional Debt Arbitrators (IAPDA).

Freedom Debt Relief has an A+ rating with the Better Business Bureau (BBB). The company has a 4.6-star rating with Trustpilot (based on 51,000+ reviews) and a 4.5-star rating with ConsumerAffairs (based on more than 34,000 reviews).

Alternatives to Freedom Debt Relief

Freedom Debt Relief or another debt settlement company may seem like the best path forward outside of bankruptcy, but you can still explore other options. Many of the alternatives have much less potential to damage your credit and could even help you improve it if you manage them responsibly. 

Debt management with a credit counselor

A certified credit counseling company or nonprofit can help you develop a debt management plan (DMP). While a DMP doesn't eliminate your debt and typically involves fees, it doesn't require you to stop making payments. 

Instead, a credit counselor negotiates with your creditors to reduce your monthly payments to something you can more easily afford, either by extending the loan term or lowering the interest rate. A counselor may also be able to negotiate the amount of debt you owe.

Debt consolidation loan

If you can manage your minimum payments but feel like you’re barely scraping by — or are getting confused juggling so many debts — consider consolidating your debt with a personal loan, home equity loan, or home equity line of credit (HELOC).

A debt consolidation loan means you’ll have one monthly payment and, ideally, it will be more affordable, either because of a longer loan term or a lower interest rate.

Balance transfer credit card

A balance transfer credit card lets you move debt to a credit card with a 0% APR introductory rate typically lasting 12 to 18 months. This strategy gives you time to pay off the transferred debt without accumulating more interest.

However, you typically pay a fee between 3% and 5% of the amount being transferred. If you don't pay off all the debt before the 0% APR offer expires, the card's regular APR goes into effect.

Bankruptcy (Chapter 7 or Chapter 13)

If you are facing severe financial hardship and can't afford a monthly settlement deposit, bankruptcy may be a faster, less expensive option. A Chapter 7 bankruptcy can discharge eligible unsecured debt in 3 to 6 months, while Chapter 13 restructures debt into a 3-year to 5-year court-supervised repayment plan. While bankruptcy can remain on your credit report for several years (up to 10 years for Chapter 7 and up to 7 years for Chapter 13), it provides immediate legal protection against collection actions.

Contact information

Options for contacting Freedom Debt Relief include:

For prospective clients

• By phone: Call 1-800-910-0065 to speak with a certified debt consultant.
• Online: Get a free debt assessment here.
• Email: [email protected]

Operating hours:

• Monday-Friday, 8 a.m. to 11 p.m. ET
• Saturday and Sunday, 9 a.m. to 9 p.m. ET

For current clients

• Phone: 1-800-655-6303
• Email: [email protected]
• Chatbot: When you log in, you can access a chatbot 24/7.

Operating hours:

• English: Monday-Sunday 8 a.m. to 9 p.m. ET
• Spanish: Monday-Thursday 7 a.m. to 10 p.m. ET, Friday-Sunday 7 a.m. to 9 p.m. ET

Note: Customer service representatives are unavailable for new or prospective clients on Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Black Friday, Christmas Eve, and Christmas Day.