Freedom Debt Relief Review
Debt settlement is one of the popular actions you can take when you are overwhelmed by debt. Although debt relief works for a lot of people, it should be considered as the last option because of the impacts it has on your credit score.
Freedom debt relief is one of the biggest names in the debt relief industry. Since its inception in 2003 and the firm claimed to have reduced debts of over 50% of its customers. Are you considering a debt settlement program? Here is all that you should know about this debt settlement firm.
How Does Debt Settlement Work?
If you are struggling to pay multiple debts including medical bills, credit card bills, private student loans, personal loans, and any other loan, you will need to consider debt settlement strategies. In most cases, people begin by analyzing the debt settlement options available.
Debt consolidation is the most popular option, however, if it turns out that the debt is higher than what can be handled through debt consolidation, then extreme measures are required. In most cases, the borrower will need to choose between debt settlement and bankruptcy.
The truth is that both of them have impacts on your credit score. Since debt settlement has a lesser impact and it is simpler, it is better to look at that option first.
The process of debt settlement at Freedom Debt Relief is similar to that of all other debt settlement companies. You will, however, need a minimum debt of $7,500 to acquire debt relief services at Freedom Debt Relief.
It is recommended that you include all credit cards with balances above $500. Although Freedom Debt Relief helps you out of your debts there are exceptions. Secured loans cannot be settled. This means that any loan that is backed by collateral cannot be enrolled.
Federal student loan debts can also not be enrolled. Apart from that limitation, there is another limitation and this has got to do with the location. Their services are not available in the following States, Georgia, Wyoming, Connecticut, New Hampshire, North Dakota, New Jersey, Oregon, Vermont, South Carolina, Washington, Hawaii, Kansas, Illinois, Maine, Washington, Rhode Island, and West Virginia.
When you enroll in the debt settlement program, you will stop paying your debts to your lenders. You will instead be asked to create a savings account. You will have control over that account.
You will be making monthly deposits into that account, your deposit will depend on the agreement you make with the debt settlement firm. According to Freedom Debt Relief, the amount will be decided based on the total debt involved and your ability to pay.
After you have accumulated the savings for some time, the settlement company will begin negotiations. They will negotiate in your interest. You will be wondering why a creditor will accept a less amount of money for what the borrower owes them.
They do not want to risk losing everything altogether. If the borrower files for bankruptcy, the creditor may not receive anything. Hence, it is better to settle for a lesser amount. Usually, the creditor agrees to take a lesser amount because the borrower has not paid his or her debt for some months.
How Much Does This Service Cost?
There are laws regulating the way fees are charged by debt settlement companies. According to the law, you are not required to pay an upfront fee before the service is rendered. You will only pay a fee when the firm successfully settles your debt.
With Freedom Debt Relief, the fee charged is a percentage of the amount involved. The minimum fee is 18% and the maximum is 25% and it also depends on the amount enrolled. If you need a special purpose account, you will pay $9.95 as account fees; you will be this fee just once.
This account also attracts a $9.95 fee which is charged monthly.
How Long Does It Take to Complete the Settlement Process?
According to the company, most customers complete their first settlement in the first six months. However, the amount you pay monthly also influences the time frame. If you make a higher monthly saving, the period will be shorter.
Other factors that influence the time frame include the amount owed and the number of accounts involved in the program. According to Freedom Debt Relief, customers who are dedicated; those who make consistent payments into the account they created for the debt settlement are likely to resolve their debts by the fifth year. Some even complete the debt settlement in 2 years.
How to Identify a Good Debt Settlement Company?
Most good debt settlement companies have these features.
A good debt settlement company should let you know the fees they charge before you even sign up. If it is a percentage, it should be clearly stated. Apart from the fees, they should also inform you about the terms of the debt settlement.
Reasonable structure fee
A good debt settlement company should also not charge you for a service you have not received. Sometimes, debt settlement does not produce the desired result. If that happens, the debt settlement companies should not charge you as though you have received the service you needed. A good debt settlement that can produce a result, will base their fees on the results they produce.
Free debt consultation
Some debt settlement companies offer free debt consultations before they begin the debt management process. This helps them to offer you the best services knowing exactly what you need. Although some debt settlement companies do not offer free consultations, it will be a plus if you find one that does.
Simple application process
It should not take more than 30 minutes for you to complete the application process. The application should be simple and easy to complete. You should not require a lot of guidance to complete the process.
Settlement time frame
It should not take more than five years to complete a settlement plan. A good firm will even offer you a timeline that can help them to achieve the results.
Good customer service
Since debt settlement is not a quick process, you will need to work with a company that has reliable customer service. It is important that you work with people who can be patient to explain any doubt you may have regarding the process. They should also always be available when you need them.
Since you cannot the exact duration of the debt settlement process, it will be great if you can work with a company that has flexible cancellation rule. The firm should allow you to cancel whenever you want to.
You should check what other people are saying about the company. Fortunately, there are reputable rating and review companies such as Trust Pilot, and consumerreports.org. Freedom Debt Relief has an Excellent rating from Trust Pilot. It also has an A- rating from the Better Business Bureau.
What You Should Know About This Debt Settlement Firm
Freedom Debt Relief had a legal issue in 2017. They had a legal issue with the Consumer Financial Protection Bureau (CFPB). CFPB alleged that the Freedom Debt Relief promised to settle the debts of all their creditors knowing very well that some companies have regulations against settlements.
Firms such including Chase, Discover, and American Express have such regulations. Freedom did not accept the claim. They denied the allegations leveled against them. They said that the claims that they are unable to settle debts of certain firms is false.
Risks Associated with the Debt Settlement Process
You should consider debt settlement carefully since it comes with a lot of risks. The risks include the following.
It affects your credit
You will stop paying off your debts in order to pay the cash into the savings account that has been created for the debt settlement, this means that, you will default on your loans. The creditors may report your missed payments to the credit reporting bureaus. This will affect your credit score and it will also appear on your report. This may affect your future credit and job applications.
There is no guaranteed success
There is no guarantee that the creditor will agree to the debt settlement. Some creditors will not even listen to the debt settlement company. They will decide to sell your account to a debt collection company instead.
Debt collectors may be on your neck
Since it will take some time for the debt settlement company to start the negotiations on your behalf, the creditor may get a debt collector to collect the money within that period. Usually, debt settlement companies wait for you to accrue enough cash in the savings account before they begin the negotiations. If the creditor decides to contract the debt collection services within that period, they will be contacting constantly and that can be really uncomfortable.
Interest rates and fees may accumulate
If the creditor charges late fees, the late fees for the non – payment of debts will accumulate over the period you accumulate the savings. With this, if Freedom is unable to negotiate a settlement or if you are unable to complete the program, you will be left with a higher balance.
You will still be required to pay tax on the forgiven debt
The Internal Revenue Service (IRS) usually tax forgiven debts. Hence, there is a likelihood that you will pay tax on the debt you managed to settle.
Freedom Debt Relief has been around since 2002. They have been highly rated by customers although a few of them were not impressed with their service.
This company offers credit counseling for their customers. Freedom is well known as one of the firms that abide by industry practices and ethics. It is accredited by the IAPDA. This firm also has enough resources and well-skilled personnel to handle your case.
They employ over 2,000 personnel who are well equipped. They also have a money back guarantee that allows customers to get their money back if they are dissatisfied with the service they receive. This also assures customers of quality service. Freedom provides customized services to their clients.
This means that they analyze your case and then provide services that will work for your personal case. Their pricing is also reasonable when compared to the pricing structure of other debt settlement companies.
Finally, Freedom Debt Relief offers a standard debt settlement timeline for customers and this ensures debt settlement within a reasonable period. Unfortunately, this firm is available in only 33 States.