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Freedom Debt Relief’s Guide to Debt Relief

Written by Banks Editorial Team

Updated September 22, 2021​

3 min. read​

Debt settlement, or debt relief is one way in which a debtor plans to repay the funds they owe to unsecured creditors like credit card companies, medical providers, and those who hold their personal loan debts.

In general, debt settlement requires the debtor to stop making monthly payments on their accounts, save the funds they would have been paying and once they have a set amount they would contact the creditor to negotiate a settlement either as one lump-sum payment or a few payments ultimately paying less than their outstanding balance at the time of the settlement.

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Decisions About Approaching Debt Settlements

Some consumers believe they can negotiate a settlement on their own with a creditor. This is often not the best idea because credit companies often will take a hard line with consumers. However, when working with a debt relief company, they tend to be more flexible. The better known a company is, the more likely a creditor is to work with them. Simply put, debt relief companies help so many people, they have more leverage than you would as an individual consumer. This not only means a company is more likely to accept a settlement, they are also likely to offer a lower settlement than if you tried to negotiate yourself.

What Does a Debt Relief Plan Require?

Discipline. In a single word, you must be prepared to accept a plan which includes a payment strategy. Once that plan is adopted, you must stick with it until you have completed the plan you have decided on.

When creditors start harassing you about payments, you need to have the discipline not to cave into their demands for funds. Instead, you should be prepared to tell them you have entered a program and ask them to contact the company you are working with.

Debt Settlement Companies Use a Process

Before you decide on a program that works for you, you will work with a consultant at the debt settlement company. Based on the information you provide debt settlement companies will attempt to find the right program to fit your needs and goals. Companies should be willing to offer a realistic plan that is customized to meet your needs. The plan needs to be affordable also so your attempt to get out from under debt is successful. If the plan is not practical, there is no possibility of it working to your benefit.

Once the plan is in place, a dedicated account will be set up for you to make regular deposits. After you have deposited the agreed upon amounts into the savings account, the debt settlement company will begin working with your creditors to reach a settlement. This process will continue until such time as you are free from debt.

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Understanding the Qualifications for Debt Settlement

Some debtors may not qualify for a debt settlement program. For example, if the bulk of your debt is mortgage payments and car payments, you cannot settle these debts for less than what is owed. However, if most of your debt consists of private student loans, credit card debt and medical debt, there is likely a path forward. These programs typically work best for debtors who are more than $7,500 in debt.

Debt Relief Drawbacks

Consumers should understand that debt relief is not without its downside. Prior to offering a settlement, you will have to stop paying your credit cards. During this period of delinquency, your balances will increase as you will be assessed interest and late fees. Another downside is the potential of being required to pay taxes on the amount of debt which is forgiven. It is imperative you know these drawbacks before you agree to a debt relief program. That is one of the reasons we make sure you have a complete understanding of what debt relief can do for you and what drawbacks are associated with our programs.

Why Freedom Debt Relief

Experience, expert negotiators. That’s what you want when you need someone to negotiate with your creditors on your behalf. That is exactly what you will get with Freedom Debt Relief. They do not just help you settle debt; they also make sure you understand every option available to you. Freedom Debt Relief knows there are no two situations which can be considered identical, and that every debtor needs a customized solution to help them get out of debt.

At Freedom Debt Relief they offer solutions to those who are burdened with unsustainable debt. They know individuals never go into debt with the belief they will not have to repay those debts in full. In fact, most people’s debt spirals out of control due to divorce, the death of a spouse, job loss, or due to medical issues. They can help — they are committed to finding a solution that meets your needs and that helps you get out from under debt quickly.

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