Is Freedom Debt Relief legit?
Frequently Asked Questions (FAQs)
Freedom Debt Relief is accredited by the Better Business Bureau and has an A+ rating. according to the organization. Based on customer reviews, the company earns 4.3 out of 5 stars. There were 359 total customer complaints lodged in the past three years, with 105 complaints closed in the last 12 months.
Cons of debt settlement
Creditors are not legally required to settle for less than you owe. Stopping payments on your bills (as most debt relief companies suggest) will damage your credit score. Debt settlement companies can charge fees. If over $600 is settled, the IRS will view this debt as a taxable income.
Generally, experts recommend other debt help options first. But if you decide that debt settlement is right for you, consider National Debt Relief, New Era Debt Solutions, and Freedom Debt Relief first since these companies have the highest customer satisfaction scores.
Can I withdraw money from my dedicated account with Freedom Debt Relief? Yes, you may withdraw from your Dedicated Account, which you control, at any time. This is an FDIC-insured account, and you control it, not Freedom Debt Relief, meaning you can withdraw from it at any time.
Paying off your debt in this way might seem more important, but the damage to your credit score can last for years. Settled debts also stay on your credit report for up to seven years and impact your future access to credit.
If a credit card account remains open after you've paid it off through debt consolidation, you can still use it. However, running up another balance could make it difficult to pay off your debt consolidation account.
Working with a debt settlement company may lead to a creditor filing a debt collection lawsuit against you. Unless the debt settlement company settles all or most of your debts, the built-up penalties and fees on the unsettled debts may wipe out any savings the debt settlement company achieves on the debts it settles.
Despite the potential downside, settling a debt by making partial repayment is better for your credit (and peace of mind) than neglecting it and leaving it unpaid. If you ignore a debt, the creditor will typically turn it over to a collection department or third-party collection agency.
Key takeaways. Undergoing the debt settlement process can help you avoid future financial headaches but is not the best choice for every person. There are many drawbacks to debt settlement including high fees, potential for legal issues and a negative impact on your credit report.
Is it worth doing a debt relief program?
Debt relief will also often give you a fixed payment plan and a set payoff date, which can also make it worth considering — as streamlining your payments can make it easier to manage while helping you save money on interest. "One of the biggest advantages of going through a debt relief program is the savings.
You may also choose to communicate with your creditors during this time. According to data from Freedom Debt Relief, your credit score is likely to drop substantially during the first few months of your debt relief program. But after that first six months, credit scores trend higher.
Debt relief services may have a negative impact on your credit score, but that impact may not be as big as you think — and in some cases, it can help your credit. How these services impact your credit depends on the debt relief option you choose.
Only unsecured debt can qualify for the Freedom Debt Relief Program. This means debt like credit cards, unsecured personal loans and medical bills. Debt that is secured such as a mortgage or an auto loan is not eligible. To qualify for the program, you should have at least $7,500 of unsecured debt.
Debt settlement costs vary from one company to another, but it's common to pay 15% to 25% of the debt the company negotiates on your behalf. The right debt relief company might be able to negotiate with your creditors and convince them to accept less than you owe—typically in a lump sum—to satisfy your debt.
Can I use debt consolidation without closing credit cards? Yes, although it depends on your situation. If you have good credit and a limited amount of debt, you probably won't need to close your existing accounts. You can use a balance transfer or even a debt consolidation loan without this restriction.
You can still use credit cards after you consolidate your debt. Consolidating credit cards means you move all of your debt to one account, which resets your credit limits. Once your credit card balance is zero, you can still use it as long as you don't close the account.
If you don't pay, the collection agency can sue you to try to collect the debt. If successful, the court may grant them the authority to garnish your wages or bank account or place a lien on your property. You can defend yourself in a debt collection lawsuit or file bankruptcy to stop collection actions.
Yes, you can buy a home after debt settlement. You'll just have to meet the lender's requirements to qualify for a mortgage. Unfortunately, that could be harder after you settle debt.
American Debt Relief uses a process known as debt settlement to help consumers erase debt after paying a fraction of what they owe. After talking with a debt consultant during a free debt assessment, customers are asked to begin saving a set amount of money in a dedicated savings account each month.
What is the lowest a debt collector will settle for?
Some want 75%–80% of what you owe. Others will take 50%, while others might settle for one-third or less. If you can afford it, proposing a lump-sum settlement is generally the best option—and the one most collectors will readily agree to.
Completion rates vary between companies depending upon a number of factors, including client qualification requirements, quality of client services and the ability to meet client expectations regarding final settlement of their debts. Completion rates range from 35% to 60%, with the average around 45% to 50%.
Using debt settlement options to reduce debt comes with several risks, including late payments on your credit report, potential charge-offs, settlement company fees, tax implications on forgiven balances, possible scams and the overall risk of settlement offers not working.
At first glance, debt settlement may appear like an excellent solution. In reality, debt relief is a valid tool for some — but for most, it should be a last-resort option. Here's what to consider before settling your debt.
You might not finish the whole program.
If that happens, you're out the fees you paid the debt settlement company for any debts they've already settled, you will still owe any debts that haven't been settled yet, and your credit report probably shows late payments which can hurt your credit.
