What is the downside of freedom debt relief? (2024)

What is the downside of freedom debt relief?

Enrolling in the program could also impact your credit score negatively for the short term. Their debt settlement program asks you to stop making payments during the negotiation phase so missed payments could hurt your credit score.

How bad does Freedom Debt Relief affect your credit?

According to data from Freedom Debt Relief, your credit score is likely to drop substantially during the first few months of your debt relief program. But after that first six months, credit scores trend higher.

What is the disadvantage of debt relief program?

Cons of debt settlement

Creditors are not legally required to settle for less than you owe. Stopping payments on your bills (as most debt relief companies suggest) will damage your credit score. Debt settlement companies can charge fees. If over $600 is settled, the IRS will view this debt as a taxable income.

How legit is Freedom Debt Relief?

Freedom Debt Relief is accredited by the Better Business Bureau and has an A+ rating. according to the organization. Based on customer reviews, the company earns 4.3 out of 5 stars. There were 359 total customer complaints lodged in the past three years, with 105 complaints closed in the last 12 months.

What are the disadvantages of debt relief order?

Does loan forgiveness mess up your credit?

Generally, when a student loan is forgiven, it shouldn't impact your credit in a negative way.

Is it better to settle a debt or pay in full?

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. A better credit score can lead to more opportunities to get loans with better rates.

Why not to do debt relief?

Working with a debt settlement company may lead to a creditor filing a debt collection lawsuit against you. Unless the debt settlement company settles all or most of your debts, the built-up penalties and fees on the unsettled debts may wipe out any savings the debt settlement company achieves on the debts it settles.

Is it a good idea to go with a debt relief program?

Debt relief plans can help make your payments more manageable, but they're not right for everyone. It's important for you to understand how each plan or program works and how debt relief can affect your finances.

Can I still use my credit card after debt settlement?

If a credit card account remains open after you've paid it off through debt consolidation, you can still use it. However, running up another balance could make it difficult to pay off your debt consolidation account.

What fees does Freedom Debt Relief charge?

Freedom Debt Relief charges a fee typically ranging from 15% to 25% of the total debt in the program, with an average fee of 21.5%. Your fee depends on the amount of debt and your state of residence, and you will only pay the fee after you authorize the settlement and the first payment has been made.

How do I get out of Freedom Debt Relief program?

How do you cancel Freedom Debt Relief? Should you decide to cancel your FDR program, you can do so at any time without penalty. You may terminate your Agreement by providing us with written notice of termination (which may be electronic).

Who is the best debt relief company?

How long does debt relief stay on your credit report?

Debt relief can be a lifeline to help you get out from under unaffordable debt—but it can also damage your credit. So, if you're considering a form of debt relief, you'll want to bear in mind its effect on your credit report, where the information can stay for up to 10 years.

How does debt relief affect your taxes?

In general, if your debt is canceled, forgiven, or discharged for less than the amount owed, the amount of the canceled debt is taxable. If taxable, you must report the canceled debt on your tax return for the year in which the cancellation occurred.

What debts are not included in a debt relief order?

Does credit forgiveness hurt your credit?

Debt relief won't hurt your credit alone. However, closing your oldest accounts can drastically lower your standing. Debt relief and debt settlement options don't hurt your credit score on their own.

What is a good credit score?

Although ranges vary depending on the credit scoring model, generally credit scores from 580 to 669 are considered fair; 670 to 739 are considered good; 740 to 799 are considered very good; and 800 and up are considered excellent.

Is debt forgiveness the same as bad debt?

Writing off a debt as bad is not the same as waiving or forgiving a debt. There are different tax consequences for debt forgiveness or waiver and there may also be tax consequences for the debtor.

Can I buy a house after debt settlement?

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.

What is a good amount to settle a debt?

For junk debt buyers, a low settlement could be around 10% of the total debt, but more typically, offers between 30% and 40% are accepted, especially if you can pay in a lump sum shortly after reaching an agreement.

What happens to unpaid credit card debt after 7 years?

In general, most debt will fall off of your credit report after seven years, but some types of debt can stay for up to 10 years or even indefinitely. Certain types of debt or derogatory marks, such as tax liens and paid medical debt collections, will not typically show up on your credit report.

Is the government helping with credit card debt?

Unfortunately, there is no such thing as a government-sponsored program for credit card debt relief.

How to get rid of 10 000 credit card debt?

Can I apply for a credit card while in a debt relief program?

You can't make any new charges on your existing accounts or get new credit cards until you complete the program. But you can get out of debt faster with total payments that are up to 50 percent less. It's also important to note that your credit counselors will help you set up a new budget when you enroll.