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Freedom Debt Relief Review – Reduce Your Credit Card Debt

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Freedom Debt Relief

  • What It Is: The largest U.S. debt relief provider. Freedom Debt Relief has resolved more than $10 billion in unsecured consumer debt since 2002
  • Minimum Enrollment Amount: $15,000
  • Typical Enrollment Timeframe: 24 to 48 months, but up to five years is possible
  • Potential Enrolled Debt Reduction: Varies depending on the creditor but can range up to 50% or more
  • Advantages: Potential for significant debt forgiveness; customers who complete the program exhibit greater financial resilience, capacity, and confidence than unenrolled peers; no need to negotiate directly with creditors; complimentary debt consultation before enrollment; complimentary referrals to more suitable services when warranted
  • Disadvantages: Not appropriate for consumers with smaller debt loads; Freedom Debt Relief’s recent CFPB settlement may give consumers pause despite subsequent changes to company practices; no guarantee of results; no framework for addressing secured debts, such as mortgages and auto loans

Consumer debt is on the rise. According to data collected by the Federal Reserve, U.S. consumers’ total outstanding debt rose from $3.313 trillion in 2014 to $4.178 trillion in 2020, the most recent full year for which data is available.

That’s a 25% jump in six years, and balance growth hasn’t slowed. Driven by tuition hikes well above the inflation rate, student borrowing is a significant driver of the relentless increase in consumer debt. Auto loan and credit card balances are on the rise too, according to the Fed.

Debt isn’t just a theoretical ill, something that affects your net worth on paper without compromising your daily choices. Long-term debt saps financial resilience. More than half (59%) of Americans live paycheck to paycheck, and fewer than 40% have an emergency fund, according to a study by Charles Schwab.

Why Freedom Debt Relief?

Worse, debt thwarts the middle-class dream most of us grew up believing was within reach if we wanted it: get married, buy a house, have kids, finance a world-class education for them, and retire comfortably.

The marriage rate dropped 13 percentage points between 1990 and 2015, and the homeownership rate among millennial households is about 8 percentage points lower than the rates for baby boomers and Gen Xers at comparable points in those generations’ histories, according to a 2018 study by the Urban Institute.

If getting out of debt were as easy as paying your bills on time, its corrosive, destabilizing effects wouldn’t be a hot topic. Unfortunately, do-it-yourself debt reduction strategies like debt snowballing don’t work for everyone. Nor do professional assistance programs like credit counseling and debt management.

Consumers struggling with substantial, persistent unsecured debt, such as credit card debt, do have options besides declaring bankruptcy. Freedom Debt Relief champions one such approach: debt settlement — also known as “debt resolution” or “debt negotiation,” and which Freedom Debt Relief terms “debt relief.”

As the United States’ largest debt settlement provider, Freedom Debt Relief has worked with upward of 700,000 clients to resolve more than $10 billion in unsecured debt. It currently settles about $200 million in debt each month. Its process is designed for consumers with at least $15,000 in unsecured debt.

The debt relief option — and working through debt settlement companies like FDR — isn’t for everyone, including consumers with smaller debt loads and individuals struggling primarily with collateral-backed obligations like home loans. Because the debt relief process requires enrollees to stop making payments to creditors, it’s virtually certain to lower enrollees’ credit scores in the short term.

As such, potential enrollees should exhaust less drastic options, such as credit counseling, before proceeding to debt relief. And the debt relief process offers no guarantee of success. In some cases, Freedom Debt Relief is unable to settle enrolled accounts.

Still, Freedom Debt Relief offers a potentially life-changing solution for many borrowers with sizable debt. The debt settlement company’s debt resolution process is easy to understand, professionally managed, and marked by clear communication throughout.

And its impacts on individual clients outlast its duration. According to a Freedom Debt Relief-commissioned study conducted by L. William Seidman Research Institute at Arizona State University, clients who complete the Freedom Debt Relief program are in better financial and emotional health than when they began.

A longitudinal study commissioned by Freedom Debt Relief quantified the program’s long-term financial and credit benefits, showing a more than five-fold decrease in median unsecured credit balances (from about $28,000 to less than $4,000) and a median FICO score increase of about 150 points during a three-year period.

Qualifications for Freedom Debt Relief

Before enrollment, each prospective Freedom Debt Relief client discusses their financial situation with an IAPDA-certified debt consultant. This consultation helps determine the client’s eligibility and suitability for Freedom Debt Relief’s services.

Specifically, each client must meet these three criteria to participate in the company’s debt relief program:

  1. Qualifying Hardship. The client must have a qualifying financial hardship. Such hardships include but aren’t limited to job loss, reduction of income, unexpected major expenses, medical bills, and divorce. The client must also have sufficient unsecured debt. Some 20% of prospects fail to demonstrate a qualifying hardship, and another 15% lack sufficient debt, according to Freedom Debt Relief.
  2. Ability to Make Monthly Deposits. The client must have the financial capacity to make the monthly deposits required by their plan, and 7% of prospects fail to meet this criterion.
  3. Outcome of Debt Consultation. The client must complete the pre-enrollment consultation and affirm that a debt settlement service is a good fit for their situation.

Not all interested consumers qualify for participation. Freedom Debt Relief claims to refer more clients to other debt resolution options — like debt consolidation lenders and credit counselors — than it welcomes into its debt relief program.

Who Does Freedom Debt Relief Serve?

Freedom Debt Relief serves a diverse cross-section of consumers. Client data aggregated and collected by the company shows:

  • The largest client age cohort is 36 to 50, accounting for 34% of all clients.
  • The 51 to 65 cohort follows closely, with 32% of all clients.
  • Of all Freedom Debt Relief clients, 79% enroll more than five accounts in the program.
  • Of all Freedom Debt Relief clients, 45% begin the program with FICO scores under 600, signifying impaired credit.
  • Reduced income is the most commonly cited client hardship at 39%, followed by medical expenses at 27% and job loss at 14%.

How Freedom Debt Relief Works

Freedom Debt Relief provides personalized financial solutions for clients dealing with significant unsecured debt burdens in seven steps:

1. Pre-Enrollment

The prospective client consults with a professional debt consultant — one certified by the International Association of Professional Debt Arbitrators (IAPDA) — to determine their suitability for the program. For example, they must have a qualifying hardship like the loss of a job, a divorce, or a medical situation.

If the IAPDA-certified debt consultant deems the client’s needs unsuitable for the program, they refer the client to other debt relief services: credit counseling and a debt management plan, debt consolidation loans, or bankruptcy.

2. Enrollment

The client enrolls any unsecured accounts they want Freedom Debt Relief to negotiate and settle on their behalf. Common account types include credit cards and unsecured personal loans with higher interest rates, as well as medical bills.

Freedom Debt Relief collects no upfront fees — payment for its services happens on the back end once they’ve settled the client’s debts.

3. Plan Customization

Freedom Debt Relief works with the client to craft a customized plan that can produce significant savings in less time compared with a minimum-payment-only strategy.

The plan includes a monthly payment — technically a deposit into an account controlled by the client — that both parties agree is affordable.

The time needed to settle all enrolled debts typically ranges from 24 to 48 months, but more considerable debt burdens often require more time.

4. Account Setup and Deposit

Freedom Debt Relief sets up an FDIC-insured settlement account controlled by the client and accessible through a secure client portal.

The client makes monthly deposits into this account per their debt settlement plan. These deposits replace any payments on enrolled credit accounts, which must become overdue for effective settlement negotiations to ensue.

The average monthly deposit is $481, according to Freedom Debt Relief.

5. Negotiation

Once the settlement account’s balance is sufficient, usually three to six months after enrollment, Freedom Debt Relief begins negotiating with each of the client’s creditors.

Using over 17 years of data and experience gained by working with nearly 3,000 creditors, Freedom Debt Relief develops a customized negotiation strategy for each client with one goal in mind: to deliver a positive outcome for that individual.

6. Settlement

Though each negotiation occurs behind the scenes, Freedom Debt Relief doesn’t finalize any settlement without affirmative client consent.

According to the company, settlement fees commonly range from 15% to 25%, depending on the client’s home state.

In some cases, proposed settlements reduce original balances by 50% or more, though lesser reductions are more common and Freedom Debt Relief doesn’t guarantee results.

7. Credit Bureau Reporting

The client’s creditors may report settlements to the major consumer credit-reporting bureaus. Reports of settled debts remain visible on the client’s credit report for seven years.

Freedom Debt Relief Results

Freedom Debt Relief is more than an assembly line for debt settlements. Throughout the process, its customer contact team works hard to help clients build financial resilience, capacity, and confidence.

It shows. According to the Seidman study, Freedom Debt Relief program graduates are:

  • Less likely to incur late fees, with just 20% of graduates reporting late fees within the past two months compared with 45% of unenrolled peers
  • More confident in their ability to handle an unexpected expense, with a spread of nearly 20 percentage points between Freedom Debt Relief grads and unenrolled peers
  • More likely than unenrolled peers to be enrolled in an automatic savings program
  • More likely than unenrolled peers to have a personal budget
  • Less stressed overall than unenrolled peers, as measured by the Perceived Stress Scale

Frequently Asked Freedom Debt Relief Questions

Enrolling in a debt relief program is a big decision. Before you do, make sure you understand what to expect — and what not to expect.

According to Freedom Debt Relief, the following questions frequently come up during the onboarding process. Questions and answers are paraphrased and condensed for clarity.

Can Freedom Debt Relief Settle Collateral-Backed Debts?

Freedom Debt Relief focuses on unsecured debt, such as credit cards, medical debt, and unsecured personal loans. You can’t enroll debt backed by collateral, such as auto loans and mortgages.

How Long Does Settled Debt Remain on Your Credit Report?

Settled accounts generally remain on your credit report for seven years from the settlement date. During that time, they may negatively affect your credit score. However, their impact won’t be as severe as debts classified as unpaid.

And you can counteract the negative influence with positive credit behaviors like making timely payments and maintaining a low credit utilization ratio.

Will the Debt Settlement Process Negatively Affect Your Credit?

In the short term, the debt settlement process could negatively affect your credit, as creditors report the enrolled accounts you’ve ceased paying on as delinquent.

The long-term outcome depends on the state of your credit before enrollment. Again, you can mitigate the negative credit impact of debt relief by engaging in positive credit behaviors.

Can Creditors Contact Freedom Debt Relief Clients Directly?

Despite legal protections — such as the Fair Debt Collection Practices Act — limiting contact between creditors and borrowers with overdue accounts, some creditors continue to send letters and make calls after you enroll with Freedom Debt Relief.

However, you’re not obligated to speak with creditors or debt collectors contacting you about enrolled accounts. That’s Freedom Debt Relief’s job.

Will Creditors Agree to Settle Current Debt?

With rare exceptions, creditors will not agree to accept less than the full balance owed on current debts. They’re much more likely to negotiate and eventually settle when you demonstrate you’re unable to repay your obligations in full.

Do You Owe Taxes on Forgiven Debts?

The IRS treats forgiven debt as income, so you typically owe taxes on settled balances. However, in some cases, the IRS may exempt forgiven debt from taxation. Consult a tax advisor to determine the extent of your liability.

When Does Freedom Debt Relief Begin Negotiating With Your Creditors?

Negotiations generally begin after you’ve accumulated a settlement account balance sufficient to make a reasonable settlement offer on your first overdue account.

The credit account’s balance, the size of your monthly settlement account deposit, and the number of creditors enrolled in your settlement plan can influence the timing. Three to six months from your enrollment date is typical, but higher credit account balances often require more time.

Will Overdue Balances Continue to Accrue Interest and Penalties During Negotiations?

On enrolled accounts on which you’ve stopped making regular payments, overdue balances typically accrue penalties, such as late fees, until you settle the account. And unpaid credit balances continue to accrue interest whether you’re enrolled in a debt settlement program or not.

Accrual of those fees and interest doesn’t affect Freedom Debt Relief’s fees — once you’re enrolled, your settlement costs won’t increase because your enrolled balances do.

Can Creditors Sue You Over Unpaid Debts?

Although creditors do have the right to sue borrowers over unpaid debts, few individual borrowers face such lawsuits, according to Freedom Debt Relief. When its clients face legal action, Freedom Debt Relief has the ability to retain a third-party law firm to negotiate settlements directly with creditors’ legal representatives.

This is an option that’s not part of Freedom Debt Relief’s standard service package. Accordingly, settlement fees may be higher as a proportion of debt settled for clients facing legal action or threats thereof from creditors.


Freedom Debt Relief’s approach to debt relief can significantly reduce clients’ enrolled debt while educating and empowering program participants.

1. The Process May Result in Significant Debt Forgiveness

While Freedom Debt Relief does not guarantee results, many clients see significant reductions in their debt — greater than 50% of their original amount of debt owed in some cases.

Freedom Debt Relief’s longitudinal study found program participants’ median unsecured debt balances falling from $28,000 to less than $4,000 in less than four years.

2. Reduce or Eliminate Debt in Significantly Less Time Than With Minimum Payments Only

According to an American Fair Credit Council-commissioned study conducted between 2011 and 2017, a typical consumer with $25,000 in debt could get out of debt in four years by working with a company like Freedom Debt Relief — and at significantly less total cost than their enrolled debt balance.

Were they to make only minimum monthly payments until they paid off their debts, their total payoff cost would reach $57,000 due to interest accrual over 429 months. That’s more than 30 years.

3. Graduates Exhibit Greater Financial Capacity and Resilience Than Their Peers

According to the Seidman study, Freedom Debt Relief graduates are significantly more likely than their unenrolled peers to express confidence in their ability to handle emergency expenses. They also score higher on the Financial Capability Scale, a measure of financial capacity and resilience

In other words, Freedom Debt Relief grads tend to be in better shape financially than consumers who’ve never been through the program.

4. Graduates Have More Financial Confidence Than Their Peers

Freedom Debt Relief graduates are significantly more likely than their unenrolled peers to express confidence in their ability to make financial decisions, according to the Seidman study. Like financial capacity and resilience, that capability endures long after the relationship with Freedom Debt Relief ends.

And Freedom Debt Relief’s longitudinal study found that participants’ median FICO credit scores increased by well over 100 points during the four-year study period.

5. You Can Enroll Multiple Accounts

Nearly 80% of Freedom Debt Relief clients enroll five or more unsecured accounts. More than 20% enroll 11 or more unsecured accounts.

Consumers whose debt woes are down to one or two stubborn accounts may not be good candidates for Freedom Debt Relief, especially if those account balances aren’t overwhelming.

6. There’s No Need to Negotiate Directly With Creditors

Borrowers are welcome to negotiate with creditors on their own — or try. But as anyone who’s gone this route knows, it’s a long, unpleasant slog with no guarantees.

Freedom Debt Relief doesn’t guarantee results either, but it does have more than 17 years’ experience negotiating with nearly 3,000 creditors, so it’s in a good position to negotiate positive settlements for its clients.

7. Meet With an IAPDA-Certified Debt Consultant

Before enrolling, all prospective Freedom Debt Relief customers consult with an IAPDA-certified professional. This complimentary consultation has incredible potential value, especially if the results suggest the prospect isn’t an ideal debt relief candidate.

8. Freedom Debt Relief Refers Unsuitable Candidates Elsewhere

When it’s clear debt relief isn’t the best option for a prospective enrollee, Freedom Debt Relief refers them to alternative services or processes: credit counseling, debt management, debt consolidation loans, or even bankruptcy.

According to Freedom Debt Relief, they refer more prospective enrollees elsewhere than they allow to enroll in the debt relief program, quelling concerns they’ll say or do anything to win business.


Freedom Debt Relief isn’t appropriate for everyone. Other debt resolution methods better serve potential clients with smaller debt loads, insufficient resources to make required monthly payments, or no evidence of qualifying hardship.

Those wary of a multiyear resolution process or prior complaints about Freedom Debt Relief’s business practices should consider other options as well.

1. Freedom Debt Relief’s Services May Not Be Appropriate for Smaller Debt Loads

Though Freedom Debt Relief’s positive impact on enrollees’ financial health is laudable, the program is more impactful for those with higher total debt loads.

The average client enrolls $29,846 in debt with Freedom Debt Relief, many from multiple sources, and the enrollment minimum is $15,000.

If you’re wrestling with a single credit card balance amounting to $2,000 or $3,000, you’re better off with another debt resolution method — perhaps a DIY option, such as snowflaking.

2. The CFPB Has Accused Freedom Debt Relief of Improper Disclosures

In 2019, Freedom Debt Relief agreed to pay $25 million to settle a lawsuit brought by the Consumer Financial Protection Bureau (CFPB), according to the Washington Post.

The bulk of the settlement went to consumers affected by what the CFPB alleged were disclosure violations. While the settlement did not obligate Freedom Debt Relief to admit wrongdoing, a company statement in response to the settlement acknowledged “changes to [their] disclosures and policies to enhance [their] program.”

3. Results Aren’t Guaranteed

Freedom Debt Relief’s process has worked for thousands of clients and graduates over the years. But they don’t guarantee results. There’s always a chance Freedom Debt Relief won’t be able to settle with some or all of your creditors.

After accounting for interest and fees, some debt relief clients may exit the process owing more than when they began. Treat the company’s representations as guidelines rather than promises.

4. The Program Doesn’t Address Secured Debts

Freedom Debt Relief’s process focuses on unsecured debt. The company has no leverage over secured creditors, such as mortgage servicers and auto lenders.

If your debt woes stem primarily from secured debt, debt relief isn’t the best solution for you.

5. The Process Is Lengthy

Freedom Debt Relief’s process is unlikely to take less than two years and can require as long as five years.

If you have the resources to save more quickly or have sufficient equity in your home to repay your debts after you sell, you may not be a good candidate for debt settlement.

6. Your Credit Will Suffer at First

Freedom Debt Relief’s process compels clients to stop making payments on enrolled debts. Those delinquencies negatively affect your credit score in the short term and may impede your efforts to rebuild credit over the medium term.

Dings on your credit report due to nonpayment are a feature of debt relief. As long as you can see a way clear to repaying your debts without missing payments, exhaust those options before enrolling with a debt relief company.

Final Word

Freedom Debt Relief makes clear that the debt settlement (or “debt negotiation”) process — which it calls debt relief — is not appropriate for everyone with persistent debts. Its minimum debt enrollment is $15,000, and the average client enrolls about $29,846, according to company figures.

Before enrolling, every potential client consults with an IAPDA-certified debt counselor, who evaluates the specifics of their situation and helps them determine whether Freedom Debt Relief is a good solution for them.

For consumers likely to benefit from enrolling in a debt relief program, Freedom Debt Relief is a strong choice. Freedom Debt Relief has worked with more than 700,000 enrollees to settle upward of $10 billion in consumer debt since the company’s inception, and thousands more enroll each year. In many cases, its solution represents a client’s best hope of avoiding bankruptcy.

If you’ve concluded you’re unlikely to resolve your debts on your own, and you’ve carefully weighed the pros and cons of debt relief, you may benefit from a consultation with a debt counselor. But it’s up to you to take that step when you’re ready.

The Verdict

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Freedom Debt Relief

Freedom Debt Relief is the leading debt relief company that offers debt resolution services for those with heavy credit card debt, medical debt, and other unsecured debt. It’s a good solution for consumers who’ve tried and failed to negotiate directly with creditors and who’d prefer to avoid bankruptcy after exhausting other options such as credit counseling. Judging by past results, its program can significantly reduce net unsecured debt over a 24- to 48-month enrollment.

However, Freedom Debt Relief is not for everyone. Its process doesn’t guarantee results, takes many months to settle debts, and may lower enrollees’ credit scores in the short to medium terms.

Editorial Note: The editorial content on this page is not provided by any bank, credit card issuer, airline, or hotel chain, and has not been reviewed, approved, or otherwise endorsed by any of these entities. Opinions expressed here are the author's alone, not those of the bank, credit card issuer, airline, or hotel chain, and have not been reviewed, approved, or otherwise endorsed by any of these entities.

Brian Martucci writes about credit cards, banking, insurance, travel, and more. When he's not investigating time- and money-saving strategies for Money Crashers readers, you can find him exploring his favorite trails or sampling a new cuisine. Reach him on Twitter @Brian_Martucci.