Freedom Debt Relief: Pros and Cons
If you’re struggling with mounting debts, the thought of being debt-free can seem like a distant dream. Fortunately, there are debt relief companies that can help you get back on track – Freedom Debt Relief being one of them. With over 750,000 clients, it is one of the largest and most reputable debt relief companies in the United States. In this article, we’ll take a closer look at Freedom Debt Relief, its pros and cons, and everything else you need to know before signing up.
What is Freedom Debt Relief?
Freedom Debt Relief is a debt settlement company that helps clients resolve their unsecured debts (e.g. credit cards, personal loans, medical bills, etc.) by negotiating with their creditors to reduce the amount owed. Although the company is headquartered in San Mateo, California, it is available to residents of most states in the US.
How does Freedom Debt Relief work?
When you sign up with Freedom Debt Relief, the company assigns you a certified debt consultant to evaluate your financial situation and create a customized debt relief plan. This involves assessing your debts, income, and expenses to determine how much you can afford to pay each month. Your consultant will also educate you on the pros and cons of debt settlement and answer any questions you may have.
Once you agree on a plan, you’ll start making monthly deposits into a dedicated account that Freedom Debt Relief will use to negotiate settlements with your creditors. The company’s negotiators will work with your creditors to lower the amount you owe. Once you reach a settlement agreement, you’ll be required to pay the agreed-upon amount in a lump sum from the funds in your dedicated account.
The entire process takes an average of 24-48 months, depending on the amount of debt you have enrolled. During this time, you’ll stop making payments to your creditors and instead deposit money into your Freedom Debt Relief account. It’s important to note that this strategy can negatively impact your credit score, and the savings from the forgiven debt may be taxable.
Pros of Freedom Debt Relief
1. Experienced and knowledgeable consultants: Freedom Debt Relief employs certified debt consultants who are trained to offer personalized assistance and guidance to clients. They are knowledgeable about debt relief options and can help you create a plan that suits your needs.
2. Negotiating power: Freedom Debt Relief has established relationships with creditors and collections agencies, giving them an upper hand in debt negotiation. This can lead to lower settlement amounts and more significant savings for clients.
3. Customized payment plans: The company offers personalized payment plans that are designed to fit each client’s financial situation. This means you won’t be stuck with a one-size-fits-all payment plan that may not be ideal for your circumstances.
4. Free consultation: Freedom Debt Relief offers a free consultation to potential clients, giving them a chance to assess their services without any financial obligation.
Cons of Freedom Debt Relief
1. Fees: Freedom Debt Relief charges fees for their services, which can be a percentage of your enrolled debt. Additionally, if your debt settlement is successful, you’ll also pay a percentage of the amount saved.
2. Negative impact on credit score: As mentioned earlier, debt settlement can impact your credit score negatively. This is because you’ll stop making payments to your creditors, which will show up on your credit report.
3. Limited debt types: Freedom Debt Relief only deals with unsecured debts, which means if you have secured debts like a mortgage or car loan, they won’t be able to help.
4. May not be suitable for all debtors: Debt settlement is not suitable for everyone. If you’re still able to keep up with your minimum payments and your debts are not too high, debt consolidation or credit counseling may be a better fit.
1. How much does Freedom Debt Relief cost?
Freedom Debt Relief charges fees based on the amount of enrolled debt. The exact percentage may vary depending on the state you live in and your debt amount. Typically the company charges between 15-25% of your total enrolled debt.
2. Will my credit score be affected by using Freedom Debt Relief?
Yes, your credit score will be affected as you’ll stop making payments to your creditors. This will show up on your credit report and could negatively impact your score. However, once the debts are settled, your score should improve.
3. How long does it take to pay off debts with Freedom Debt Relief?
The duration of the program depends on the amount of enrolled debt. Typically, it takes between 24-48 months to complete the program.
4. Can I still use my credit cards while enrolled in the program?
No, you can’t use credit cards while enrolled in the program. It’s important to focus on making deposits to your Freedom Debt Relief account instead.
Freedom Debt Relief is a viable option for people struggling with significant amounts of debt. The company has experienced and knowledgeable debt consultants who can help clients create customized debt relief plans. Although the program can negatively impact your credit score, it could be a useful tool for those who want to settle their debts and start fresh. As with any financial decision, it’s best to weigh the pros and cons and consult with a financial advisor before signing up for any debt relief program.
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Freedom Debt Relief is a debt settlement company available to residents of most states in the US. The company helps clients resolve their unsecured debts by negotiating with their creditors for an agreed lower amount to be paid in full from the funds in an account dedicated to the settlement. The entire process can take an average of 24-48 months and may negatively impact credit scores. Freedom Debt Relief offers a personalized payment plan, but they only deal with unsecured debts. The company charges fees based on the percentage of enrolled debt and the saved amount. Clients are advised to consult a financial advisor before enrolling in any debt relief program.