Is Freedom Debt Relief worth it?
On Trustpilot, Freedom Debt Relief has a 4.5-star rating. The majority of reviews are largely positive, though a few people have registered complaints about the fees Freedom Debt Relief charges. Freedom Debt Relief is accredited by the Better Business Bureau and has an A+ rating.
Freedom Debt Relief has an A+ rating with the Better Business Bureau. Freedom Debt Relief is accredited by the American Fair Credit Council and the International Association of Professional Debt Arbitrators. The Consumer Financial Protection Bureau received 120 complaints in 2022 about Freedom Debt Relief.
It helps debtors manage their debt burden and negotiates with creditors on their behalf. Will likely hurt your credit score: Like with any debt settlement company, working with Freedom Debt Relief will typically make your credit score drop at first. Depending on your situation, it could be a significant tumble.
Negotiations can drag on for months or even years, and if you don't settle, you'll have to pay back all the interest and late fees that piled up during this time. If you do settle, you will make regular payments to Freedom Debt Relief until all your accounts are cleared. This usually takes between 24 to 48 months.
Working with a debt management company can result in less debt or a faster payoff — but there are often hefty fees, often up to 25 percent of the debt enrolled, attached to the services. Working with a debt relief company often results in credit damage.
Once you enroll debts in the program, you stop making payments on enrolled accounts. Instead, you open a dedicated account to hold payments for creditors. You'll own and control the account and deposit monthly payments into it. Freedom works with you to determine the amount to be deposited each month into the account.
Creditors don't want you to use the cards when you're having a benefit from a debt management program. But if there's a card that you can keep out of the program, you can do that. You can keep the card out and use it for emergencies.
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.
If you can afford to pay off a debt, it is generally a much better solution than settling because your credit score will improve, not decline.
Similar to Chapter 7 bankruptcy, debt settlement can stay on your credit report for up to seven years. While this may seem like a long time, the impact of this event on your credit report will lessen over time.
What are the disadvantages of debt relief order?
Your debt relief order will appear on your credit file for six years. This may affect your ability to get credit in the future. You can't promote, manage, or set up a limited company, without permission from court. Also, you can't act as a company director, without getting permission from court.
Unfortunately, there is no such thing as a government-sponsored program for credit card debt relief.
Freedom Debt Relief's fee ranges between 15% to 25% of enrolled debt (the amount of debt enrolled to be settled)–your rate may vary depending on your state of residency and amount you enroll.
Debt Snowball Method – With this method you'll list your debts from smallest balance to largest balance and work on paying off the smallest balance while making minimum payments on everything else. Once the smallest balance is paid off you move on to the next smallest while still meeting all other minimum payments.
Debt forgiveness is usually available for unsecured debts like credit cards, personal loans, or student loans. Secured debts like a mortgage or a car loan are not usually eligible for debt forgiveness. If you default on a secured debt, the lender will likely pursue foreclosure or repossession.
As with most other negative credit report entries, settled accounts stay on your credit reports for seven years.
Freedom Debt Relief is a reputable company with a proven track record. The company is a member of the American Fair Credit Council and a Platinum member of the International Association of Professional Debt Arbitrators. If you have $7,500 or more in unsecured debt, Freedom Debt Relief may be able to help you.
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.
While the effects of bankruptcy hang around for 7 to 10 years on your credit report, that's not how long you must wait to borrow money. The impact of the penalty decreases each year, and it's even possible to get a car loan within six months of your discharge.
Debt relief can take a number of forms, including reducing the debt, lowering the interest rate on it, or extending the period for repayment, among others. Creditors are often willing to consider debt-relief measures when the alternative is total default by the borrower.
What happens when you do a debt settlement?
A debt settlement company negotiates with your creditors. Often, it will require you to stop paying your creditors and make payments into a savings account. It will then use your money to pay your debt and collect the fees you owe. You may fall further behind on payments, and your credit score could plummet.
Typically, a creditor will agree to accept 40% to 50% of the debt you owe, although it could be as much as 80%, depending on whether you're dealing with a debt collector or the original creditor. In either case, your first lump-sum offer should be well below the 40% to 50% range to provide some room for negotiation.
Future lenders see this distinction as more favorable, compared with a charged-off account marked settled, since a settled account indicates you didn't repay the full balance that you owed. Generally, a charge-off just subtracts more from your already-dropping credit score.
Paying off old debts before they reach the statute of limitations or credit reporting deadline can positively influence your payment history, a significant factor in your FICO score. This move can potentially boost your credit score and contribute to a healthier credit profile.
In most cases, a lien cannot be put on your home for an outstanding debt. However, there are a few exceptions where a creditor can force the sale of your home: Federal, state, counties, and municipalities attempting to collect on past due property taxes.
