Debt settlement companies help you resolve unmanageable debt with the goal of avoiding bankruptcy. Their strategy is to help you negotiate an agreement with your creditors to pay less than the full balance on your debt. While this could damage your credit in the short term, it could also help you get out of financial trouble and work toward a brighter financial future.
There are many debt relief companies out there, but it can be helpful to compare two of the most popular companies to understand how they work and differ. So let's look at National Debt Relief vs. Freedom Debt Relief to decide which debt relief option is a better fit for your situation.
National Debt Relief vs. Freedom Debt Relief
National Debt Relief and Freedom Debt Relief are both established and accredited debt settlement services. They work on a similar fee structure, and both have the same minimum debt balance to use their services. However, each company has something different to offer consumers.
|Types of debt||
|Program length||24-48 months||24-48 months1|
|Fees||15%-25% of the amount of your total enrolled debt||15%-25% of the amount of your total enrolled debt|
|Availability||42 states||Approximately 38 states|
|Accreditation||AFCC, IAPDA||AFCC, IAPDA|
|Best for...||Clients looking for top-notch customer service||Clients with hefty debt balances looking for affordable debt relief|
|Visit National Debt Relief||Visit Freedom Debt Relief|
How does National Debt Relief work?
National Debt Relief is focused on settling your debt and charges a fee between 15% to 25% of the amount of debt you enroll in. But you won't owe anything until your debt has been successfully settled.
National Debt Relief offers:
- A certified specialist will determine your eligibility by reviewing your financial information during a free consultation.
- The National Debt Relief team will reach out to creditors and negotiate a reduction in the total balance you have to pay to satisfy your debt obligations.
- National Debt Relief will try to protect you from creditor phone calls while you participate in their program.
- You make monthly payments into an FDIC-insured savings account to save up a lump sum amount to pay your creditors.
- At the end of 24 to 48 months: your creditors will receive a single lump sum payment, your debt should be resolved, and National Debt Relief will receive their fee from you.
In general, National Debt Relief works well at negotiating unsecured debt, but, like most debt relief services, it can't help with secured loans such as auto loans or mortgages. However, they may be able to help with some kinds of business debt, and they can handle private student loan debt.
How does Freedom Debt Relief work?
Freedom Debt Relief works on a similar business model to National Debt Relief.
Here is how the debt relief process works when you work with Freedom:
- A Certified Debt Consultant will evaluate your debt situation during a free consultation.
- After enrolling in the debt relief program, the company's debt experts will negotiate with creditors on your behalf.
- You'll deposit money monthly into an FDIC-insured bank account that you control.
- Once you've deposited enough money into the savings account, Freedom Debt Relief will help you make a lump sum payment to your creditors for a negotiated amount that's less than what your debt is worth.
- The company's debt consultants will work with creditors to ensure that this payment settles your full debt balance.
- When your debt is successfully settled, they'll also collect their fee from you.
Like National Debt Relief, Freedom Debt relief helps negotiate unsecured debts but cannot help with any loans that have collateral, such as auto loans or mortgages. However, they may be able to help with certain business debt, and they can handle private student loan debt.
What both debt relief companies excel at
National Debt Relief and Freedom Debt Relief both excel at delivering on their promises. Both are accredited by the American Fair Credit Council (AFCC) and the International Association of Professional Debt Arbitrators (IAPDA). And neither charges any upfront fees until they've delivered for you and successfully settled your debt.
WarningThe Federal Trade Commission (FTC) made it illegal for debt settlement companies to charge upfront fees in 2010. If you ever come across a company that asks for payment before determining your eligibility for the program, it's probably a red flag.
4 important differences between National Debt Relief and Freedom Debt Relief
Although each company offers a lot in common, there are important differences between National Debt Relief vs. Freedom Debt Relief. Here are some key disparities between the companies you'll want to consider when deciding which is better for your financial situation.
1. Customer service ratings
National Debt Relief is a Better Business Bureau (BBB) Accredited Business with an A+ rating. It has an average customer satisfaction rating of 4.67 out of 5. Freedom Debt Relief is also a BBB accredited with an A+ rating. Its average customer rating is 4.46 out of 5 (both as of Sept. 29. 2023).
The difference in customer ratings suggests that overall many customers have had a positive experience with Freedom Debt Relief, but when issues arise, they tend to be more serious and challenging to resolve. Our Freedom Debt Relief review provides more insight into the customer experience that past clients report.
The Consumer Financial Protection Bureau also sued Freedom Debt Relief for charging customers advance fees, misleading customers about fees and services, and not properly disclosing their rights to consumers concerning funds they'd deposited. The company agreed to pay $20 million to resolve the dispute. National Debt Relief has not faced such actions.
If reducing the risk of problems is a top goal, National Debt Relief may be a better bet. Of course, most Freedom Debt Relief customers did have a good experience, which justifies the company's overall higher consumer rating. Still, the lawsuit, coupled with unresolved BBB complaints, could give some people pause.
2. Fees charged
When determining how to pay off debt, you want to be conscious about how much you spend as part of your efforts. And there are differences in the fees you'll pay for the two debt relief programs offered by Freedom Debt Relief vs. National Debt Relief.
Both National Debt Relief and Freedom Debt Relief report that their fees equal between 15% and 25% of the total debt enrolled. Depending on your situation, the quote you receive from each company for debt relief services may differ. So which company will be better for you could vary, and you might want to inquire with both companies to get the best possible rate.
3. States where service is available
Freedom Debt Relief is available in 38 states, while National Debt Relief is available in 42. The states where the companies do business also differ. For example, Freedom Debt Relief operates in Connecticut, while National Debt Relief does not. The state where you live may dictate which of these services you use based on whether it is available in your area. You can read our National Debt Relief review for more information on where NDR provides services.
4. Length of time in business
Freedom Debt Relief started in 2002 and has been incorporated since 2004, while National Debt Relief started in 2009. If you want to work with a company that was one of the pioneers of the debt settlement industry and has been in business for the longest time, Freedom Debt Relief could be your preferred choice.
Which debt relief service should you choose?
If price is your top priority, then you might want to get a free quote from both companies and opt for the service with the lower fee. For example, if you have $25,000 in debt that a company helps you settle, the difference in the fees you pay could be substantial. If you are charged at a rate of 18%, your minimum fee would be as much as $4,500, while a 15% fee would come in at a more affordable $3,750.
If you don't want to take a chance on a potential customer service problem, you may opt for National Debt Relief instead, as National Debt Relief doesn't have the history of being sued by the CFPB that Freedom Debt Relief does.
Can you trust Freedom Debt Relief?
Freedom Debt Relief is accredited by the American Fair Credit Council as well as by the International Association of Professional Debt Arbitrators. It has been in business since 2002 and is accredited by the Better Business Bureau. It also has a 4.46 rating out of 5 from customer reviews left with the BBB. It is a legitimate company and not a scam.
It has, however, been sued by the Consumer Financial Protection Bureau for misleading customers about fees and business practices. The company settled its lawsuit, and now clearly indicates it does not charge upfront fees. Just be careful to read the fine print and understand what you are agreeing to when you sign up for their debt settlement program.
Is National Debt Relief legit?
National Debt Relief is accredited by the American Fair Credit Council as well as by the International Association of Professional Debt Arbitrators. It has been in business since 2009 and is accredited by the Better Business Bureau. It also has a 4.67 out of 5 rating with the BBB based on customer reviews. It is a legitimate company.
What is the difference between debt relief and debt consolidation?
Debt consolidation is a type of debt relief that involves securing a debt consolidation loan and using it to pay off the money you owe creditors debt collectors, and/or lenders. Consolidation could reduce your monthly payments and could also sometimes reduce interest rates. Having a lower interest rate could help you pay off your loan sooner since you'll accrue less interest charges. Debt consolidation generally will not damage your credit as long as you pay the minimum payments on your consolidation loan on time.
The debt settlement process involves hiring a company to conduct debt negotiation with your creditors to convince them to accept payment that's less than the full amount due as full satisfaction of your debt. This could reduce your credit score, and could potentially impact your taxes as forgiven debt can be taxable. If you work with a debt relief service to settle debt, you'll also owe them a potentially high fee based on the debt amount (15% to 25% of debt settled). This isn't an issue when you consolidate debt, though you may have to pay a smaller loan origination fee (0.5% to 1% of the loan).
Does debt relief affect your credit?
Some types of debt relief could have an adverse impact on your credit. If you settle debt, you generally could see your credit score fall. With debt settlement, creditors agree to accept less than the total amount you owe.
They will usually report that debt as settled on your credit report, which could adversely affect your score and your ability to borrow in the future. Other types of debt relief, such as debt consolidation, generally will not have the same negative impact.
National Debt Relief vs. Freedom Debt Relief: bottom line
Working with a debt settlement company is not right for everyone. It could damage your credit, and it can take some time until you've saved enough money to make a lump sum payment to settle your debt. There are also plenty of alternative debt solutions to consider in your pursuit of becoming debt-free, such as debt consolidation, a debt management plan, or credit counseling. Still, settling debt could be preferable to bankruptcy and sometimes makes the most sense.
If you want to settle debt, you can negotiate with creditors on your own to avoid the fees that debt settlement companies charge. However, if you're not comfortable working through the debt settlement process yourself, both National Debt Relief and Freedom Debt Relief could help you deal with your debt issues for a fee.
National Debt Relief has slightly higher customer ratings than Freedom Debt Relief and is available in a few more states.
Freedom Debt Relief Benefits
- Recommended Minimum debt: $15,000
- Has resolved over $16 billion in debt
- Affordable program with one low monthly deposit
- No upfront costs or hidden fees
- May resolve unsecured debt in as little as 24-48 months1