Freedom Debt Relief Review: Is it a good way to consolidate your debt?


Debt happens — often out of what feels like an absolute necessity at the moment.

Maybe you broke out that emergency credit card for car repairs, thinking you’d pay it off way before the interest kicked in, only to have your best-laid plans foiled by life.

Before you know it (sick dogs, sick kids, fewer hours at work), you’re paying more than you can easily afford, and you’re stuck making minimum payments while the interest racks up.

None of us wants that, which is why debt-resolution services can seem so attractive. They offer to get in between you and creditors and negotiate until you wind up owing less than what you will if you keep just making small payments for years.

But is debt resolution worth the effort and high fees?

Does it really deliver on promises made to help get you out of debt fast?

One of the most well-known names in the business is Freedom Debt Relief — the largest such company in the United States.

They make an attractive claim — that they can save you 15% to 35% and help you pay off your debt in as little as two to four years. Sound too good to be true?

Here’s the scoop.


Freedom Debt Relief bills itself as the largest debt negotiator in the United States, and it’s been around long enough to attract scores of reviews — both good and bad, though the company does have an A+ Better Business Bureau rating.

The service is meant for people with unsecured debt — credit card charges, personal loans, unsecured student loans and medical bills are the most common examples of unsecured debt.

 Freedom Debt Relief is not the best option for those looking for direct relief on debts like secured student loans, car notes or mortgages. (Though it is certainly worth noting that getting your other debts in order can ultimately help your bottom line as well.)

To begin the debt relief process, you’ll answer some basic questions during your free consultation. Right out of the gate, you’ll tell the company how much debt you have and and whether you’re behind on payments.  

Then, Freedom Debt Relief sets you up with a personalized plan to make payments to a FDIC insured dedicated account in your name.

You must have at least $7,500 in debt, and you can add multiple credit cards, medical providers or other creditors to the program.

The consultant helps determine how much you will pay based on your income and other bills.

Freedom Debt Relief's goal is to talk your creditors into accepting less money than the total amount of debt you owe.

Once an amount is agreed to, you must approve the arrangement before a formal settlement becomes a binding agreement.

The first settlement usually happens within two to four months of the program — which is dependent on you consistently making payments to your account at the planned rate. Still, that's much faster than you'd pay it on your own.

You then stop payments on your bills, which means you will accrue interest changes, late fees and serious credit bruises.

However, Freedom Debt Relief offers that if you make their agreed upon payments, plus fees of 18% to 20% of the enrolled debt, you will still pay off your debt faster than if you managed payments directly to the creditors, on the original terms.


This part is kind of a double-edged sword. According to Freedom Debt Relief, your ability to build up money in your dedicated account (rather than slowly chipping away at your debt on your own) helps the company’s negotiators ultimately resolve your debt.

Of course, the flip side is that you pay directly to  Freedom Debt Relief instead of meeting the schedule for payments to your individual credit cards and other creditors. That typically hurts your credit. 

It’s important to weigh how much your credit score matters in your life right now — and what it’s going to matter in the coming years.

You should be able to build your credit back up over time, but it could take years (negative information can stay on your credit report for up to seven years).

And that’s assuming you are in a place financially where you can practice really good credit habits.


You don’t pay a fee until a debt is negotiated — and even then you’ll have to give your approval of the negotiated amount.

Once you OK the deal, a fee (included in the monthly savings program) is processed. Fees typically range from 18% to 20%, but that can vary according to your state.

Keep in mind that the IRS considers forgiven debt to be taxable income, but it’s worth asking a tax professional to help you find an exemption.

Freedom Debt Relief claims that clients who make all their monthly payments pay, on average, 50 percent of their enrolled balance before fees, or safe 25% to 32% after fees, over the 2- to 4-year repayment program.

Also, any time you let accounts become delinquent (which can happen if you stop making minimum payments to your credit card or other creditor accounts), your creditors will start tacking on interest and late fees, ultimately increasing the balance you owe.

Obviously, the goal with a debt-settlement program is to pay less, even if your balance goes up before a settlement is reached.

Technically, though, your balance would increase anyway if you only made the minimum monthly payments.


Freedom Debt Relief has been in business since 2002. While the company is not accredited by the Better Business Bureau, it holds an A- rating with the agency, which isn’t too shabby.

While 90% (that’s a lot!) of its ratings from consumers on BBB are favorable, there are also a lot of negative reviews, too. Its composite score is 4.3 stars out of 5.

Unsurprisingly, as with so many quick solutions, there’s also some controversy here you should know about:  

The federal government sued Freedom Debt Relief in 2017, alleging that the company “took advantage of vulnerable consumers who turned to the company for help getting out of debt” by misleading consumers about creditors’ willingness to negotiate, deceiving consumers about the extent of services and fees, and failing to disclose rights to funds.

The company obviously disagreed, and responded by saying the Consumer Financial Protection Bureau “fundamentally misunderstands how debt settlement works and has acted without proper regard for the consumers it is charged with protecting.”

There are two sides to every story, but there’s a lot going on there to carefully consider.


There are several common types of debt relief. Debt resolution, sometimes called debt settlement, is one of the most popular.

Instead of dealing with creditors yourself, which is exhausting, time consuming, and often very confusing, a debt resolution company, like Freedom Debt Relief, does the legwork.

They handle negotiations, and you make monthly payments into a specially designated account.

You'll later use that money to pay off your debts at the lower cost that the company has bargained.

Debt resolution can help you to pay off your debts faster, which will save you money in the long run when you consider the interest rates you won't be responsible for.


Debt consolidation, on the other hand, involves taking out yet another loan into which you'll be consolidating your other debts.

The loan may carry a lower interest rate, but it ultimately won't affect the principal amount you owed in the first place.

On the positive side, it won't affect your credit score – but you must have very good credit in the first place to qualify. In most cases, this isn't likely if you've got a lot of unresolved debts.



    • You can pay off your debt early, for less than you really owe, and avoid bankruptcy — as long as you stick closely to the schedule and do not default. Yes, please!
    • It’s super easy to sign up.
    • You’ll make only one monthly payment, which is a welcomed change if you’re used to juggling several debts and their individual payments!
    • Freedom Debt Relief lets you keep track of the progress on its dashboard and claims it won’t charge you until a deal is made and you approve it.  
  • You’ll be out of debt faster than if you just keep making minimum payments on your own.
  • You feel good for taking action on an issue that is stressing you out, and holding you back: debt.


    • There’s no guarantee that Freedom Debt Relief will actually settle your debts. Remember: They’re negotiating, and there’s always a chance that negotiation just won’t work.
    • Your credit can be impacted. If you’re planning on buying a house or a car anytime soon, you’ll want good credit. Beyond that, credit scores can have an impact on your utility services or even your lease if you rent. That could be especially bad if, as just mentioned, the negotiation doesn’t work in the first place.
    • Using debt-settlement services might result in you being subject to collections or even getting sued by creditors or collectors.
  • The service is not available in every state (according to NerdWallet, borrowers in Connecticut, Georgia, Hawaii, Illinois, Kansas, Maine, Mississippi, New Hampshire, New Jersey, North Dakota, Oregon, Rhode Island, South Carolina, Vermont, Washington, West Virginia and Wyoming are out of luck), and fees may vary based on state.


Like anything involving your financial health, do some hard thinking and more research before you make a decision.

Ultimately, make sure you are as aware of the consequences as possible first. 

If your credit is already poor, and you have struggled with debt for many years, and do not see an end in sight, Freedom Debt Relief can be a solid solution.

However, if you need credit within the next few years, to buy a car, qualify for student loans or buy a home, or your debt is relatively new, consider more conservative routes, like transferring your balance to a low-interest personal loan or credit card, and paying it off aggressively. 

About Holly Johnson

Holly Johnson is a financial expert, award-winning writer, and Indiana mother of two who is obsessed with frugality, budgeting and travel. Her personal finance articles have been published in the U. S. News, Wall Street Journal, Fox Business, and Life Hacker. Holly is founder of of the family finance resource,, and is the co-author of Zero Down Your Debt: Reclaim Your Income and Build a Life You’ll Love. Learn more about Holly here.

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