Debt Reduction

FDR's Fresh Start Program, also known as Debt Negotiation or Debt Settlement, is an aggressive approach to becoming free of unsecured debts. It is appropriate for debtors with a serious amount of debt or who are considering credit counseling or bankruptcy. The program's goal is to find the optimal solution to lower your debts, help you deal with your creditors, and get you on the road to financial freedom.

Freedom Debt Relief charges a fee that depends on a number of things, including the State you're in, the amount of debt you're enrolling, and other variables. But in general, if you enroll in a standard 36 month program, in most cases your fee works out to approximately 7% of your total enrolled debt per year. And the most important thing to remember is that there is absolutely NO FEE RISK to you - we guarantee you will pay NO FEES for our services until we successfully resolve a debt for you. (Fees may vary by state).

Even better than simply saving money is that once the settlement payment is made, your accounts will be satisfied - meaning you no longer have any of your original debt outstanding. If resolving unsecured debts 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 you set up and control. Freedom does not charge any upfront or monthly fees. The only fees we collect are those associated with debts we actual resolve for you.

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

Step 4: After funds have accrued sufficiently, we begin negotiating with your creditors to reduce your debts. We stay in contact with you to keep you apprised of your situation. Please note, it may take several months of savings before we are in a position to make settlement offers.

Step 5: Once a settlement is successfully negotiated with a creditor, you will be asked to authorize the settlement, after which we will send you a "Good News" notification from us.

Step 6: After the debt resolution is negotiated and a payment is made toward that settlement, you pay only the fee associated with that debt.

Step 7: After the full settlement amount is paid, your creditors may report to the credit rating bureaus that your accounts are "settled in full," "settled," "paid," "paid by settlement", 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 free of that debt and Freedom will continue working hard on your other debts!

After the Program: If you are interested in purchasing a home, purchasing an automobile, or related financial services products - we can help you find a company to apply for access to other products. Or, if you simply want to talk about a financial services decision, we will always help you think about your best strategy for staying debt free and building personal wealth.

*Clients who make all their monthly program payments pay approximately 50% of their enrolled balance before fees, or 71% including fees, over 24 to 48 months. Not all clients are able to complete our program for various reasons, including their ability to save sufficient funds. Our estimates are based on prior results, which will vary depending on your specific circumstances. We do not guarantee that your debts will be resolved for a specific amount or percentage or within a specific period of time. We do not assume your debts, make monthly payments to creditors or provide tax, bankruptcy, accounting or legal advice or credit repair services. Our service is not available in all states and our fees may vary from state to state. Please contact a tax professional to discuss potential tax consequences of less than full balance debt resolution. Read and understand all program materials prior to enrollment, including, for example, potential adverse impact on credit rating.
**Please note, Freedom Debt Relief is not a credit repair organization.

Debt Reduction FAQ's

Q. Will I be totally debt free when I am 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. Not all consumers complete our program, and sticking with your monthly savings plan is the most important factor in determining your success.

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 the program period. 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?
Absolutely not. In our Fresh Start Program, our clients pay no fees whatsoever until and unless we resolve their debts. Once we settle one debt, only the fee associated with that debt is due, and we continue working to settle your remaining accounts. All fees associated with the program are included in the one monthly savings amount that our account executives will quote to you. Keep in mind that the amount of the fee may change depending on the state you reside in.

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 generally 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 negotiating on some accounts but not others.

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 after your debts are settled, 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 creditors 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.

Q. Will I receive phone calls from collectors?
There are federal and state laws designed to protect you from collection 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 to minimize any calls that get through to you.

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. Typically, your balance will increase until a settlement is reached. 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 a strong position to stand up to your creditors and fight for the best settlement possible. Together, FDR's team of negotiation specialists are resolving approximately $40,000,000 of debt each month.

Q. Do you begin negotiating with my creditors right away?
Except when dealing with certain difficult creditors, we generally contact your creditors right away (typically within approximately 1-2 weeks of your joining our program) to let them know that we have authorization to communicate and negotiate on your behalf 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 savings amount and the number of creditors you have enrolled in the program as well as the balance of each individual account). In some instances it may take more than 9 months before the first settlement is reached. That said, Fresh Start clients (who are not paying fees until a settlement is reached) should see settlements come faster than our historical averages.

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. 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 may 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.

Q. Do you have any tips and/or advice for choosing a debt settlement company?
We recommend you view the FTC's comments on choosing a debt settlement company, click here to view.