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Problems With Debt Settlement Companies: Freedom Debt Relief

couple discussing debt problem
With credit card rising to an all-time high in 2017 at a staggering $1.02 trillion dollars in outstanding debt, Americans are looking for ways to eliminate this overwhelming burden. The emotional stress that debt takes on a person creates depression, anxiety, and fear; making one desperate to change their financial circumstance. Many in this stressful position ignore the common principle of “if it sounds too good to be true, it probably is.” Customers of Freedom Debt Relief have learned that the hard way.

Freedom Debt Relief is the nation’s largest debt settlement provider and it claims to have settled more than $7 billion in debts for consumers. Yet, the Consumer Financial Protection Bureau filed a lawsuit against Freedom Debt Relief for deceiving consumers. One of these deceptions alleged in the CFPB complaint is regarding its negotiation ability. Freedom knows that certain major creditors have policies against negotiating with debt-settlement companies. It does not make it clear to consumers that they may need to handle the negotiations with those creditors themselves and that they are paying for Freedom to “coach” them in negotiations. In sum, Freedom wasn’t settling anything. Instead, it took money from already cash-strapped people and put them in a more stressful situation by forcing them to negotiate and settle their own debt. The complaint further alleges that Freedom fails to disclose the fees being charged and that the consumer is entitled to get back the funds in their accounts if they leave the debt settlement program. The complaint is available here.

It’s a bad idea to make decisions under stress and an even worse idea to make financial decisions in that state of mind. This article illustrates the problems with debt settlement companies, specifically with Freedom Debt Relief. Make a sound choice and leave debt negotiation to a professional.

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Kevin Fallon McCarthy is the McCarthy Law PLC’s managing attorney and an experienced Phoenix debt attorney. Mr. McCarthy has also worked as general counsel for a large corporation. He has corporate counsel experience in human resource matters, general corporate governance, and union class action litigation.