If credit card balances keep climbing and the minimum payments feel impossible, you have probably seen ads for Freedom Debt Relief. It is one of the largest debt-settlement companies in the country, and it promises to help you pay less than you owe. That sounds great, but settling debt is a serious decision with real trade-offs.
This review walks through how Freedom Debt Relief works, what it costs, how long the program takes, and how it can affect your credit. We will also cover the downsides and some alternatives. Debt settlement is not the only path out of debt, so it helps to see the full picture first.
Who Is Freedom Debt Relief?
Freedom Debt Relief was founded in 2002 and has been in business for more than 20 years. By its own reporting, it has resolved over $20 billion in debt for more than a million clients. The company is BBB-accredited with an A+ rating and is an accredited member of the American Association for Debt Resolution (AADR, formerly the AFCC).
It is worth noting the company settled a Consumer Financial Protection Bureau enforcement action in 2019. That history does not make it illegitimate, but it is a reminder to read your agreement closely and ask questions before you enroll.
How Freedom Debt Relief Works
Freedom Debt Relief offers debt settlement, also called debt resolution. Instead of paying your creditors in full, the company tries to negotiate a reduced lump sum to clear each account.
Here is the basic flow:
1. Free consultation
You talk with a representative who reviews your unsecured debts, such as credit cards and personal loans. Secured debts like mortgages and auto loans usually do not qualify.
2. You build a savings fund
Instead of paying creditors directly, you set aside money each month into a dedicated account you control. This pool of cash becomes the source of your settlement offers.
3. Negotiation
Once enough money has built up, Freedom Debt Relief negotiates with each creditor to accept less than the full balance. Settlements happen one account at a time, so some debts clear sooner than others.
4. Settlements get paid
When a creditor agrees, the settlement is paid from your savings account. You only pay the company's fee after a settlement is reached and you approve it.
What Freedom Debt Relief Costs
Freedom Debt Relief charges no upfront fees. By law, debt-settlement companies cannot collect a fee until they actually settle a debt for you. The performance fee typically runs around 15 to 25 percent of the enrolled debt, and the exact rate depends on your state and your situation. A small monthly account maintenance fee may also apply for the dedicated savings account.
Because fees and terms change, check Freedom Debt Relief's site for current fees before you sign anything. Terms and conditions apply.
If you prefer to keep more control and skip a full-service firm, a do-it-yourself option like SoloSettle lets you negotiate directly with your creditors, with no middleman and no phone calls. You only pay when you reach a deal.
SoloSettle
SoloSettle
Settle your debt directly with your collector. No phone calls and no middleman. SoloSettle's platform handles the negotiation and paperwork, and you only pay when you reach a deal.
Standout feature
Direct written negotiation with collectors, no phone calls
Fees
Up to 19% of face value, paid only on settlement
Pros
Negotiate directly with collectors in writing — no stressful phone calls
Cons
Fee of up to 19% of face value and settlement isn't guaranteed
How Long the Program Takes
Most debt-settlement programs run roughly 24 to 48 months. The timeline depends on how much you owe, how much you can save each month, and how willing your creditors are to negotiate. The more you can put aside monthly, the faster you build leverage to settle.
Keep in mind there is no guarantee every account will settle, and there is no guaranteed timeline. Some people finish faster, and some take longer or drop out before completing the program.
How It Affects Your Credit
This is the part many ads gloss over. Debt settlement usually hurts your credit, at least in the short term.
Most programs ask you to stop paying your creditors so you can build your settlement fund. Missed payments get reported as late, and accounts can be charged off or sent to collections. That can pull your score down significantly. Creditors can also still call you or even file a lawsuit while you are saving up.
There can be tax consequences too. Forgiven debt of $600 or more is often reported on a 1099-C and may count as taxable income. The damage is usually not permanent, and you can recover, but you should expect a hit. Learn more about what to expect for your credit score after debt settlement before you commit.
Rebuilding afterward matters just as much as settling. Kikoff's Premium and Ultimate plans include debt-negotiation help, and the platform also rebuilds your credit with positive payment history once your accounts are settled.
Kikoff Credit Account
Kikoff Credit Account
Everything you need to build your credit, right in one app. Build credit, lower debt, and unlock progress with tools that actually work.
Loan Amount
$750-$3,500 depends on the plan
Term
12 months
APR
0%
Admin Fee
$0
Monthly Fee
$5/month for Basic plan, $20/mo for Premium plan $35/mo for Ultimate plan
Credit Check
No
Average Score Increase
An avg increase of +86 points within a year with on-time payments
Pros and Cons
Pros
- You may pay less than the full balance you owe.
- No upfront fees, and you only pay after a settlement is reached.
- A long track record and AADR accreditation.
- One monthly payment into your savings account instead of juggling many bills.
Cons
- Your credit can take a serious hit from missed payments and charge-offs.
- Fees of roughly 15 to 25 percent of enrolled debt add up.
- No guarantee every account will settle.
- Creditors can still sue you during the program.
- Forgiven debt may be taxable.
No program can promise results, and debt settlement is never zero risk. Go in with clear expectations.
Alternatives to Consider
Debt settlement is one tool, not the only one. Depending on your situation, these may fit better:
- A debt management plan through a nonprofit credit counselor, which can lower interest without asking you to default.
- A debt consolidation loan for bad credit to roll multiple balances into one payment.
- Doing it yourself by learning how to negotiate a debt settlement on your own.
- Comparing other firms, such as in our National Debt Relief review or Accredited Debt Relief review.
- For severe cases, weighing Chapter 7 vs Chapter 13 bankruptcy with a professional.
Who Freedom Debt Relief Is For
Freedom Debt Relief may make sense if you have several thousand dollars in unsecured debt, you are already behind or close to it, and you cannot realistically pay the full balances. It is built for people who want a company to handle the negotiating for them.
It is probably not the right fit if you can still keep up with payments, if your debt is mostly secured, or if you are not ready to accept credit damage. If you want lower interest without defaulting, a credit counseling plan may serve you better.
Frequently Asked Questions
Is Freedom Debt Relief legit?
Yes, Freedom Debt Relief is a legitimate, long-established company that is BBB-accredited with an A+ rating and a member of the AADR. Being legitimate does not mean it is right for everyone, so review the fees and credit impact carefully before enrolling.
How much does Freedom Debt Relief cost?
Fees typically run around 15 to 25 percent of your enrolled debt, charged only after a settlement is reached and you approve it. The exact rate depends on your state, so check Freedom Debt Relief's site for current fees.
Will Freedom Debt Relief hurt my credit?
Most likely, yes, at least for a while. The program usually involves missed payments and charge-offs that lower your score. Many people recover over time, but you should expect a short-term hit.
How long does the program take?
Most clients are in the program for roughly two to four years. The exact length depends on how much you owe and how much you can save each month, and there is no guaranteed timeline.
