If you’re feeling overwhelmed by debt, offers of debt relief might seem as enticing as a cold glass of water in the desert.
Freedom Debt Relief is one company that offers various services to help people get rid of their debt faster — for a fee. But over the years, it has been involved in lawsuits alleging that it doesn’t live up to its end of the bargain.
In this Freedom Debt Relief review, you’ll learn about the company’s legal issues, the services it offers, and alternative options to consider.
Freedom Debt Relief review: Lawsuits abound
Freedom Debt Relief positions itself as the leader in debt negotiation, resolving over $8 billion in debt. But over the years, the company has been the target of lawsuits claiming it takes customers’ money without providing promised results.
State lawsuits filed against Freedom Debt Relief
In 2009, the district attorney’s office in San Mateo, California, where the company is headquartered, filed a suit claiming several infractions, including:
- The company didn’t attempt to contact all the creditors of each customer to initiate a settlement negotiation.
- The company told customers it was settling their debt accounts. Months later, customers found out the accounts had been sent to collections or creditors had filed lawsuits against customers.
- The company rebuffed customers when they asked about the status of their settlements.
- Some customers were denied the money-back guarantee the company offered.
That same year, Washington state residents filed a class-action lawsuit against the company, claiming it charged fees above the state’s maximum and didn’t inform customers that the process might ruin their credit.
The company has settled lawsuits in Colorado, Delaware, New York, and Rhode Island as well.
Federal lawsuit filed against Freedom Debt Relief
In November 2017, the Consumer Financial Protection Bureau (CFPB) filed a federal lawsuit against Freedom Debt Relief. In the filing, the CFPB accused the company of the following:
- Charging customers without settling their debts as promised
- Making customers do their own settlement negotiations
- Misleading customers about fees and the scope of its services
- Failing to inform customers of their rights to funds they deposit with the company
Based on these lawsuits and the allegations brought against Freedom Debt Relief, it might not be worth the risk of seeking out its services.
Freedom Debt Relief review of services
According to its website, Freedom Debt Relief offers the following services to prospective customers:
- Credit counseling
- Debt consolidation
- Cash-out refinance
- Debt settlement
- Tools to help you do it yourself
To find out which service is right for you, it encourages you to call for a free debt evaluation. Based on the conversation, you might set up an account with Freedom Debt Relief and deposit money each month to help cover the cost of the program and debt settlements, if applicable.
Freedom Debt Relief fees
There’s no official fee schedule you can find on the website, but the company does offer a “savings estimator” that shows what you’d need to deposit each month for the program.
For example, if you live in Utah and have $25,000 in debt, you’ll deposit $397 monthly into the account for 46 months to complete the debt settlement program. That’s $18,262 total, and the company estimates the program would save you $69,550, assuming the debt is on a 16.99% APR credit card and you’d make only the minimum payments otherwise.
But here’s the kicker: That money doesn’t go toward making your monthly debt payments. You have to do it on your own. There’s also no breakdown of the monthly deposit to show you how much goes toward fees and how much goes toward settling the debt.
What’s more, there’s no guarantee your debt will be settled at all.
Freedom Debt Relief reviews from customers
In spite of the legal issues Freedom Debt Relief has had over the years, it maintains an A-plus rating with the Better Business Bureau as of December 2017.
Here are a couple of examples of positive Freedom Debt Relief reviews from satisfied customers on the Better Business Bureau website (all reviews are lightly edited for grammar and spelling):
“We have been with freedom debt relief for two months now. They are great. I have settled an account already. … They are always there to help answer all your questions and are very friendly.”
“Five-star experience. Already resolved one of my accounts. Great to work with.”
Others have complained about the company lengthening its program (and increasing the cost along with it):
“This has been the worst company I have ever worked with. I wish I would have paid off my credit card debt on my own rather than dealing with them. They originally promised me that I would be debt-free by 38 months. Fast-forward 24 months, and I still have my largest credit card account unpaid, and FDR is urging me to take out a Consolidation Plus loan. I agreed and was told my payments would continue to be the same, that I was still on schedule. It was the same amount. But the loan tacked on an extra two years of payments. The program is now looking like it will be 62 months, not the original 38 I was promised. They also did not tell me that the Consolidation Plus loan is a 22.00% APR, or I never would have agreed to doing business with them and found a personal loan elsewhere. They did not also tell me that it would tack on an extra $3,000 in fees. … Every time I spoke with a customer service agent from the company, I got a different answer, and it seems that no one is on the same page. ”
Freedom Debt Relief review: Consider this alternative instead
If you’re neck-deep in debt, Freedom Debt Relief’s services might be tempting. But the cons far outweigh the pros.
Instead, consider working with a certified credit counselor through the National Foundation for Credit Counseling (NFCC). Certified agencies are largely funded through voluntary contributions from creditors and local grants, so they often charge little or nothing.
As you get the help you need, you’ll get back on the right track without worrying about whether you’re being taken advantage of along the way. Being burdened by debt can be difficult enough. The last thing you need is to work with a company that might not have your best interests at heart.
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