Debt Reduction

FDR's Debt Reduction Program, also know as Debt Negotiation or Debt Settlement, is an aggressive approach to becoming debt free. It is appropriate for debtors with a serious amount of debt or who are considering credit counseling or bankruptcy. The program is custom tailored to each of our clients, to find the optimal solution to lower your monthly payments, help you deal with your creditors, and reduce your debts fast.

Typically, we negotiate your balances down to about 50% LESS than what you owe. For example, through our debt reduction program, if you owe $30,000 to your creditors, we may be able to lower debts by over $15,000. Sound too good to be true? Call us to find out if you can qualify, and exactly what your savings estimate is.

Even better than simply saving money is that your accounts will be satisfied - meaning you no longer have any of your original debt outstanding. If being debt free in as little as 2-3 years (or faster in some cases) for less than half of what you owe sounds good, give one of our debt consultants a call to discuss your specific situation.

Debt Reduction Steps

The Debt Reduction Program is very effective. Here is a step-by-step overview:

Step 1: Call or e-mail us for a free consultation. We will assess your financial situation and determine your potential for debt reduction.

Step 2: We will work with you to determine the appropriate monthly dollar amount that you plan to save towards a negotiated settlement. This amount is typically significantly less than your current minimum payments, and goes toward paying off your debt (not simply paying credit card interest charges). These funds will be saved every month in a new account that we set up for you, but which you control.

Step 3: Once you enroll in the "Debt Reduction Program" we contact your creditors in an attempt to handle all future creditor communications. You are requested to avoid using credit while on the program.

Step 4: After funds have accrued to make reasonable offers, we begin negotiating with your creditors individually. Typically, we attempt to reduce debts by 50% of your current balances. We stay in contact with you to keep you apprised of your situation.

Step 5: Once a settlement is reached and payment is made to eliminate the account at the reduced amount you'll receive a "Good News" notification from us.

Step 6: We request that your creditors report to the credit rating bureaus that your accounts are "settled in full," "settled," "paid," or "settled for less than the full amount." Either way, you no longer owe on this account and the balance is zero. Congratulations, you are now Debt-Free!

After the Program: If you are interested in credit repair, purchasing a home, purchasing an automobile, or related financial services products - we can help you contact one of our affiliates to apply for access to other products. Or, if you simply want advice about a financial services decision, we will always help inform you about your best strategy for staying debt free and building personal wealth.

*Please note, Freedom Debt Relief is not a credit repair organization.

Debt Reduction FAQ's

Q. Will I be totally debt free when I’m done?
Our program is focused on dealing with only unsecured debts (credit cards, medical bills, unsecured personal loans). We cannot help you with debt that is secured by collateral (such as mortgages or auto loans). After completing the program, however, the money that you are no longer paying towards your unsecured creditors can now be used to pay down secured debts, as well as to save for your financial future.

Q. Will I have to take out another loan to cover my current debts?
No. Our debt reduction program is not a new loan. Some of our clients will use a “consolidation” loan in conjunction with FDR’s debt negotiation program, but most fund their settlements with a monthly payment into their settlement savings account over 2 – 3 years. That being said, we do have a relationship with a lending company, and some clients who demonstrate a consistent pattern of saving their monthly draft amount on time may be eligible for a loan to pay off one or more of their settlements. Of course, this is never something that is required of any FDR client.

Q. How is the service fee paid, are they paid upfront?
Our fees are not charged upfront – instead they are withdrawn from your new settlement account each month. Typically our fees are spread out over a period spanning 18-19 months. The fee is broken into a Retainer fee, that is paid out over the first 3 or 4 months, and then a Service fee that is paid out over the following 15 months. All fees are included in the one monthly savings payment that our account executives will quote to you.

Q. Should I put all of my credit cards in the program?
If you have one card with a low balance that you can quickly pay down to zero, then you may hold onto it for emergencies. However the program will not work unless you enroll all of your high balance (greater than $500) credit card accounts. As you can imagine, it makes it difficult for us to negotiate with your creditors if they can see that you are keeping other accounts open and paying those accounts in full.

Q. Who controls the bank account where I am saving funds for creditors?
You do. The bank account is set up in your name and the money in the account is your money. The reason why we recommend keeping it in a new account that is separate from your existing bank accounts, is that in our experience, this separation dramatically increases (by a factor of 2-3 times!) the probability that you will succeed in FDR’s program. FDR’s fees are deducted from this account each month, according to the Agreement that you sign with us. But the accumulated savings in the account are owned by you.

Q. How does this affect my credit?
If you do not make required minimum payments to your creditor you may be breaking the terms of your agreement with them and your actions will probably be reported to consumer reporting agencies as a late, delinquent, charged-off or past due balance. This is true whether or not you have enrolled in a Debt Settlement Plan. Depending upon the condition of your credit report at the time of enrollment, a Debt Settlement Plan may have an adverse effect on your credit report and credit score. Our goal is to get you out of debt for the lowest cost, in the shortest period of time without declaring bankruptcy. Once you are out of debt, we will be able to refer you to a reputable credit repair organization if you desire.

Q. Will I receive phone calls from collectors?
There are federal and state laws designed to protect you from creditor harassment. However, the fact is that most of our clients experience some collection calls. FDR’s goal is to get your creditors to call us and not you when they want to ask for money, and we will work with you minimize any calls that get through to you. In addition, we will work with you to make sure violators of collection laws, including the Fair Debt Collection Practices Act (FDCPA) are appropriately handled.

Q. Will I owe taxes on my forgiven debt?
The IRS considers a forgiven debt as taxable income, so at the end of the year, they will expect taxes to be paid on the settlement. The IRS, however, has a form (Form 982) available for certain hardship situations that may exempt you from this tax. Please contact a tax advisor to discuss this issue further.

Q. Do interest and late fees accrue on my accounts?
If you let your accounts go delinquent, your creditors will continue to add interest and late fees onto your balances. Keep in mind that the interest is going to accrue regardless of whether you make minimum payments or not. FDR’s goal is to negotiate substantial reductions to the balances on your accounts, even after the interest and late fees have accrued.

Q. Could I negotiate on my own?
Yes you can. You can also do your own taxes and repair your own car, but most people choose to seek help. Most people prefer to leave these tasks to experienced people who earn their livelihood as specialists in those lines of work. Our team of debt negotiation specialists has only one job - negotiating reductions on our clients’ unsecured debts, each and every day of the week. Our knowledge and experience puts us in the best position to stand up to your creditors and fight for the best settlement possible. Together, FDR’s team of negotiation specialists are resolving approximately $4,000,000 of debt each month (and growing!). Trust the experts.

Q. Do you begin negotiating with my creditors right away?
We will contact your creditors right away (typically within approximately 1 week of your joining our program) to let them know that we have Power of Attorney and to request that future collection calls come to us and not you. The actual negotiation activity is typically very limited until you have saved up enough in your settlement account to make reasonable offers to your creditors. Most (but not all) creditors do not want to spend time negotiating an account unless they know there are funds available. The first settlement typically happens in month 6 to 9 of a client’s program (this varies greatly and depends on your monthly payment and the number of creditors you have enrolled in the program as well as the balance of each individual account).

Q. Will my debts be sent to a law firm? Will this result in a lawsuit?
Creditors do have the right to send debts to third party collection agencies and/or law firms in order to collect a debt. If this happens, we will continue to negotiate on your account and will treat the debt as a priority creditor (meaning we will try to resolve it first, before moving onto your other accounts). Based on our actual experience, it is a small percentage of cases on which lawsuits are actually filed. When this does happen, usually the purpose of the lawsuit is to force a settlement. We will continue to negotiate to settle the debt, although the settlement percentages are often higher than typical “non-legal” settlements. If a lawsuit is filed before you have saved up enough funds to negotiate a settlement, we will seek to resolve the account by putting it on a long term payment plan for 100% of the balance. Please note, we are not a law firm and cannot provide legal advice or legal representation.

Q. Do you guarantee that you settle all of my debts for a certain percentage?
No. Every case is a negotiation, and there is no guarantee how the negotiations will wind up. Furthermore, the success of our negotiations is highly dependent on your ability to save a specified amount each and every month you are in the program.

Q. Will entering your program repair my credit?
No. We are not a credit repair company, and our goal is not to repair your credit. Our goal is to negotiate settlements at less than face value on your unsecured debts.