Freedom Debt Relief Review: How This Debt Settlement Company Works

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Updated on Friday, December 7, 2018

Struggling to repay debt isn’t something you have to do alone. Consumers can turn to solutions such as credit counseling or even bankruptcy (if the debt is too much to handle).

Another option that can offer you some savings is working with a debt settlement company. Debt settlement companies negotiate with creditors to settle your debt for less than what you owe.

Freedom Debt Relief is one company that’s in the business of helping consumers get rid of debt. In this post, we’ll review what Freedom Debt Relief has to offer, including how much it costs, whether it’s safe and what to expect when you sign up.

What is Freedom Debt Relief?

Freedom Debt Relief was started in 2002 by Andrew Housser and Brad Stroh to offer debt resolution services and financial education to consumers. The mission of Freedom Debt Relief is to operate with integrity and support clients in their journey to paying off debt. With offices in San Mateo, Calif., and Phoenix, Freedom Debt Relief employs over 2,000 people.

Freedom Debt Relief is a leader within the debt settlement industry. The company is a member of the American Fair Credit Council (AFCC). According to Freedom Debt Relief, the company resolves an average of 43,891 accounts per month and has settled over $9 billion in debt.

Breakdown of Freedom Debt Relief

Here’s a look at what you need to know about Freedom Debt Relief and its services.

Services offered

Debt settlements: The Freedom Debt Relief service is a settlement program for people who are struggling to repay debt. You make monthly deposits into a Federal Deposit Insurance Corp.-insured account set up by Freedom Debt Relief. As the account grows, debt consultants negotiate settlements with your creditors. The money to pay off the settlement is taken from your account. Most settlements are structured settlements where you pay off the debt in installments.

Minimum debt required

You must have $7,500 or more in unsecured debt.

Soft or hard credit pull required

A soft pull is required.

Time frame

It can take 4 to 6 months to get your first settlement agreement. Clients typically pay off 70% to 75% of their debt over 24 to 60 months.

Consultation fees

Fees are only charged when a settlement agreement is reached. Fees typically range from 15.00% - 25.00% of the original debt amount, but they can vary by state. The average fee is 21.5%. Each settlement agreement will show the fees to be charged. You have to approve the offer before it goes into effect.

Cancellation fees


Service fees


Types of debt accepted

Debts accepted include credit cards, medical bills, department store cards, personal loans and other unsecured debt. This program cannot help you with federal student loans, auto loans, mortgages and other debt that has collateral backing it. Freedom Debt Relief may be able to help with certain private student loans.


Freedom Debt Relief is a member of the AFCC. Consultants are certified by the International Association of Professional Debt Arbitrators.


4-plus stars on Better Business Bureau (BBB); no complaints about the company in CFPB consumer complaint database

Service limitations


Free resources and tools

Freedom Debt Relief has an education area on its site that breaks down different debt repayment strategies (such as debt consolidation or debt management) and how they compare to debt settlements.

Customer service

Customer service is available seven days a week, including evening hours. Freedom Debt Relief is available by phone and email.

Who’s eligible?

  • You need to have at least $7,500 in eligible debt. Eligible debts include unsecured debt such as credit card debt, medical bills and personal loans. According to Freedom Debt Relief, higher debt balances are required for settlements because creditors are less willing to make deals on small amounts that you can pay relatively quickly.
  • You also need to have enough disposable income each month to put away cash into an account set up by Freedom Debt Relief. This savings account is what’s used to pay off your debt and fees when a debt settlement is reached.

What are the benefits and risks of Freedom Debt Relief?



You get to work with expert negotiators. The edge that these negotiators have is experience. If you’re unable to reach an agreement with creditors on your own, they may be able to reach one for you.

The forgiven amount may be taxed. The amount you save through a debt settlement can be considered income and taxed as such. Speak with a tax professional about how forgiven debt will impact you.

Settlements reduce how much you owe. The purpose of a debt settlement company is to settle your debt for less than the balance. Freedom Debt Relief may be able to settle your debt for as low as 50% of what you owe.

The fees. All this isn’t free. Freedom Debt Relief charges you a percentage of your original debt amount when a settlement is reached. The average fee is 21.5%. You could negotiate settlements on your own or with the help of a credit counselor, possibly at a lower price.

No fee is charged until a settlement is reached. You don’t owe any money until you agree to the settlement. You’ll see how much the fees are in the settlement agreement that you have to approve.

You risk racking up fees and getting sued. You may not get a settlement for several months. During this time, the settlement company won’t be making minimum payments on your debt. Interest and other fees still apply to your balances. If you don’t make payments, you can continue getting calls from collectors or sued for nonpayment. Your debt can grow exponentially during this period, putting you in a jam if they aren’t able to reach a settlement. Not paying your bills can do some major damage to your credit report.

A loan isn’t required. The program through Freedom Debt Relief does not require a loan, so you’re not taking out more debt. Instead, most clients save incrementally to pay off each settlement.

There’s no guarantee. There’s a chance the company won’t be able to reach a settlement with creditors. Freedom Debt Relief does not guarantee settlements.

How much does Freedom Debt Relief cost?

Fees from Freedom Debt Relief only apply when you approve a settlement. The fee is broken down into a monthly fee that’s paid from an account created when you start the program.

Freedom Debt Relief can save you money through a settlement, but it comes at a high cost. You should also consider other options (we’ll talk about some below) before you work with a debt settlement company.



Debt settlement

15% – 25% of your original debt amount, but the amount may vary depending on your state

How long does the program take?

The negotiation and settlement process doesn’t start right away. You have to save up money in a dedicated account before debt negotiators start working their magic. It can take four to six months for you to get your first settlement, but the timeline will vary and there are no guarantees.

If you do get a settlement, you may be able to settle your debt for as little as 50% of your balance, according to Freedom Debt Relief. But the typical amount saved is 15% to 35%. Clients who keep up with the program by making monthly deposits into their dedicated account typically pay off around 70% to 75% of their debt over 24 to 60 months.

Is Freedom Debt Relief safe to use?

Freedom Debt Relief isn’t BBB-accredited, but the company has decent reviews on the BBB website. Customers report that customer service and consultants are helpful and respectful. The consensus is that customers are pleased with the service and how their debt is being resolved.

But there was a lawsuit filed against Freedom Debt Relief by the CFPB in November 2017. The complaint states that Freedom Debt Relief misled consumers on how the service works and that the company charges fees even if there isn’t a settlement reached. Freedom Debt Relief has refuted such claims. If you use Freedom Debt Relief and it charges you a settlement fee without a settlement, report it to the FTC. This practice is prohibited.

How do I sign up for Freedom Debt Relief?

  • If you’re interested in Freedom Debt Relief, the process starts with you completing a form on the website or contacting a certified debt consultant for a free evaluation. Get started here.

What to expect after signing up with Freedom Debt Relief

Here’s how the Freedom Debt Relief process works:

  • Step 1: Receive your customized plan and start saving in your dedicated account. You’ll work with Freedom Debt Relief to come up with a debt plan that works for you. This plan includes deciding the monthly deposits you can make into your dedicated account. You may also be asked to complete some forms, including a form that gives Freedom Debt Relief permission to speak with your creditors. Each month, you deposit money into the FDIC-insured account to grow the funds you have available for debt repayment. The reason for the account is that creditors are more willing to make deals when there’s proof of funds available.
  • Step 2: Negotiation. Freedom Debt Relief will negotiate with creditors to try to settle your debt as you continue making deposits into your account.
  • Step 3: You approve settlements. You will be contacted to approve and authorize each debt settlement.
  • Step 4: Fulfill the settlement agreement. After paying off the settlement, creditors should report to the credit bureaus that you’ve settled your debt. You keep depositing money into your dedicated account and Freedom Debt Relief will keep negotiating until your debts are paid off.

Alternative methods to pay down debt

Debt consolidation

Debt consolidation is when you take out a new installment loan to pay off your other debt. A debt consolidation loan with a competitive interest rate could save you money. The average credit card interest rate is 15%. You may be able to find a personal loan for debt consolidation that has an interest rate as low as 3.99% APR (depending on your credit).


  • It simplifies your debt. A debt consolidation loan makes it so that you have fewer payments to worry about each month. All the debts are rolled into one payment.
  • It gets you out of the minimum payment trap. Making just the minimum payment on credit card debt (or none at all) will hurt you. Minimum payments don’t put a real dent in your balance and interest will make your balance steadily increase. An installment loan is designed for you to pay it off within a set time frame. It will force you to make more than small $20 or $30 minimum payments here and there so you can speed up repayment.


  • Poor credit may cause a problem. If you’ve gotten to a place where you have many unpaid debts and poor credit, you may not be able to qualify for a debt consolidation loan. But there are a few lenders who may be willing to work with people who have less-than-stellar credit. Learn more here.
  • Credit inquiry. Applying for a new loan typically requires a credit check. But the benefits of consolidating debt with an affordable loan may outweigh any minor hit that your credit will take because of an inquiry.

As low as 2.49%

Credit Req.

Minimum 500 FICO®


24 to 60


Origination Fee



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Debt management plan

A debt management plan is a program typically offered by nonprofit credit counseling services. To create a debt repayment plan, a counselor goes over your income and debt to come up with a repayment strategy. They also speak with your creditors to negotiate lower fees and lower interest rates. You send one payment for the plan to the credit counselor and they disburse payments to creditors for you.


  • The guidance and debt management from experts. Working with a counselor can be worthwhile if you’re struggling to come up with a plan. They pay bills for you so that you have less interaction with your creditors. Nonprofits that offer debt repayment plans may also offer other credit counseling services that can teach you how to manage your credit in the future.
  • Faster payoff. You can get a lower interest rate and a break on fees negotiated, making it possible to repay debt faster.


  • The cost. Debt management plans are not free. There may be an enrollment fee and a monthly fee that can range from $25 to $35 on average.
  • It’s only for certain debt. The debts you can add to a debt management plan include unsecured debts such as personal loans, credit cards, medical bills and other debt in collections. Typically, you can’t include your mortgage, second mortgages, car loans or federal student loans.


Bankruptcy is usually looked at as a final resort because of what it can do to your credit. There are many types of bankruptcy, but individuals typically file either Chapter 7 or Chapter 13. Chapter 7 is a complete liquidation of your assets to repay your debts, and this form of bankruptcy generally does the most damage to your credit. Chapter 13 sets a repayment plan where you pay part of what you owe instead of liquidating all your assets.


  • You can get a clean slate. Bankruptcy can be a saving grace if you’re dealing with unmanageable debt and you’re close to losing your home. Some debts may be discharged completely, and bankruptcy may be able to save your home from foreclosure.
  • You can stop collections calls and litigation. Filing for bankruptcy should put a stop to collection attempts and lawsuits when your financial situation has gotten out control.


  • The fees and credit hit. There are filing, administrative and attorney fees. Bankruptcy stays on your credit and can negatively impact you for seven to 10 years.
  • Bankruptcy isn’t a quick fix. Bankruptcy is more than signing off on a few documents. Your assets will be reviewed closely to determine if you qualify. You need to take pre-filing and post-filing counseling classes. Some debts typically can’t be discharged, such as federal student loans. You also need to change your habits after filing to avoid going into deep debt again once your case is over.

DIY debt settlement

A do-it-yourself debt settlement will work much like a debt settlement service like Freedom Debt Relief, except you negotiate with your creditors to settle the debt for a lesser amount on your own.


  • You keep all the savings. If you land a deal with creditors on your own, you’re able to keep the money saved instead of paying some of it to debt negotiators. As part of the settlement, you may also be able to get a creditor to remove an account from your credit report. This is called “pay for delete.”
  • You’re incentivized to be aggressive. Debt settlement companies generally charge a fee that’s a percentage of your original debt amount. With this approach, there’s less incentive to get you the most savings possible. When you take the lead, you can push for the lowest settlement possible because it’s in your best interest.


  • The process may not be easy. Professionals are professionals for a reason. They may be able to get a settlement — and at a lower amount than you. Dealing with creditors and negotiating can be stressful. The CFPB has some tips for getting debt settlements on your own here.
  • There are still taxes to think about. Your creditor can report the forgiven amount to the IRS, and your savings is taxable. Speak with a tax adviser about your debt to avoid getting a surprise tax bill.