Is Your Debt Relief Company Legit?

Is Your Debt Relief Company Legit?
BY Aimee Bennett
May 15, 2018
 - Updated 
Aug 17, 2023
Key Takeaways:
  • Debt settlement means convincing creditors to accept less than you owe as payment in full.
  • Legitimate debt settlement companies do not collect upfront fees, guarantee to "wipe out" your debt, or tell you to stop communicating with your creditors.
  • Debt settlement can get rid of your debt faster, but it's not a free lunch.

It’s no secret that debt—particularly credit card debt—is a major problem for millions of people. U.S. credit card debt hit an all-time high of $1.03 trillion in Quarter 2, 2023.

As interest rates rise and the cost of living (housing in particular) continues to escalate, more Americans are looking for help. If you’re one of them, you may have heard that debt relief companies can offer lower payments and help resolve your debt. A part of you may hope the claims are true, but there’s also probably a part of you that is skeptical—and that’s a good thing.

You owe it to yourself to get educated about debt relief, an often-misunderstood solution that helps thousands of clients put debt behind them. Is debt relief really legit? We’ll help you answer that question.

What is a debt relief company?

Part of the confusion is that the term “debt relief” can mean different things. For Freedom Debt Relief specifically, it means debt settlement (also known as debt negotiation or debt resolution). Our debt settlement program can be an effective alternative to other debt solutions like:

Once a client enrolls our debt relief program, we negotiate directly with their creditors on their behalf to reduce, as much as possible, the amount of principal our clients must repay on unsecured (primarily credit card) debt balances. By reducing how much they owe, we usually help clients who are dealing with $7,500 or more in debt resolve their debt in as little as two to five years.

You should also be aware that enrolling in a debt settlement program has a negative impact on your credit score, triggers calls by collection agencies, and sometimes can expose you to legal action. Every debt relief option has its pros and cons, however, and it is important to be transparent about both.

Not all debt relief companies have your best interests at heart

Before you entrust your financial future to a debt relief company, it’s extremely important to be confident that you will be working with a credible provider. In 2010, after a boom in the industry, some debt relief companies were not acting in their clients’ best interests, so the Federal Trade Commission (FTC) stepped in to implement stronger regulations to protect consumers. Also during this time, the American Association for Debt Resolution (AADR) formed as a trade association to ensure compliance and transparency.

As a result of these changes, many less-credible companies left the industry. Yet, there are still some bad apples. Protect yourself by doing your research before hiring a debt settlement provider. If you have questions, any company should be open and happy to give you the answers you seek. If a company avoids answering your questions, consider that your first red flag.

Is your debt relief company legit?

When doing your research, beware of the following red flags. Any of these may be a sign of a company that does not have the consumer’s best interests at the heart of their business. Watch for companies that:

  1. Charge fees before they settle debt. The FTC rules prohibit a debt relief company from collecting any fees until after it has negotiated a settlement and the customer has accepted it.

  2. Say they can settle all of your debts for a single, promised reduction. The debt settlement process involves negotiating each client’s debt with each creditor. Depending on the amount, the creditor and the individual situation, each settlement may be different.

  3. Tout a “government program” to erase credit card debt. No such programs exist.

  4. “Guarantee” to make all your debt go away. As with many things in life, there are no guarantees. A reputable debt settlement company has the motivation to work hard and get the best results possible for clients. In talking with a company, ask about the results it has obtained for clients.

  5. Claim to be able to stop all debt collection calls and lawsuits. The program of debt settlement requires enrolled credit accounts to go past due. Creditors may respond by calling frequently, or even threatening (or filing) lawsuits. Good debt settlement companies guide you through the process and help you with any issues or concerns.

  6. Tell you to stop communicating with creditors. Stopping all communications may not always be in your best interest. A reputable company leaves that decision to you, offering tools and advice on asking creditors to communicate only with the debt relief company.

  7. Have only vague answers to your questions. Reputable debt settlement businesses will be upfront about fees, counsel you on the possible challenges of the process, and tell you how long the process might take.

At Freedom Debt Relief, we want you to get all the answers you need to help you tackle your debt. We’re proud of the work we do, and we want clients to be confident before they commit to the process. We’ll answer any questions you have, any time.

Explore your debt relief options and make the right choice

If you’re concerned about debt or falling behind on payments, we understand how confusing it can be. You may even be asking, “Is Freedom Debt Relief legit?” We will help you understand your options for dealing with your debt, including our debt relief program. Our Certified Debt Consultants can answer any questions or concerns you may have and help you find the right path forward. Find out if you qualify right now.

Insights into debt relief demographics

We looked at a sample of data from Freedom Debt Relief of people seeking debt relief during June 2024. The data provides insights about key characteristics of debt relief seekers.

Credit card balances by age group for those seeking debt relief

How do credit card balances vary across different age groups? In June 2024, people seeking debt relief showed the following trends in their open credit card tradelines and average credit card balances:

  • Ages 18-25: Average balance of $7,378 with a monthly payment of $209

  • Ages 26-35: Average balance of $10,797 with a monthly payment of $300

  • Ages 36-50: Average balance of $14,340 with a monthly payment of $405

  • Ages 51-65: Average balance of $14,364 with a monthly payment of $420

  • Ages 65+: Average balance of $14,837 with a monthly payment of $397

These figures show that credit card debt can affect anyone, regardless of age. Whether you're just starting out or nearing retirement, managing credit card debt can be challenging.

Support for a Brighter Future

No matter your age, FICO score, or debt level, seeking debt relief can provide the support you need. Take control of your financial future by taking the first step today.

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