You can cancel Freedom Debt Relief at any time with no early termination fee by calling your assigned debt consultant at 800-910-0065 and telling them you want to end the agreement. Any money remaining in your dedicated savings account is returned to you. Knowing how to cancel Freedom Debt Relief is the easy part; the harder work is protecting yourself on the way out, because settlements already reached, fees already earned, debts still unsettled, and taxes on forgiven balances all follow you past the cancellation date.
Check Your Account Before You Call
Log into your dashboard or request a current statement first. You need three numbers in front of you: the balance in your dedicated savings account, which enrolled debts have been settled, and whether any settlements are mid-negotiation or mid-payout.
Settlements that have been agreed to but not fully paid out matter most. If you’ve accepted a settlement with a creditor and payments are still going out, canceling doesn’t erase that deal. You’ll have to finish those payments yourself, or the creditor can void the settlement and reinstate the original balance plus the interest that accrued while you were enrolled.
Making the Cancellation Official
Call the consultant and state clearly that you’re terminating the agreement. Then put it in writing the same day. Email works if your agreement allows electronic communication; otherwise send certified mail so you get a delivery receipt. Include your full name, account number, the date of the phone call, and a plain statement that you are canceling. Keep copies of the letter, the mailing receipt, and anything Freedom Debt Relief sends back.
Ask for written confirmation that your account has been closed. If nothing arrives within a couple of weeks, follow up in writing again. That paper trail is your protection if there’s ever a question about when you canceled.
Stop the Bank Draft Yourself
While you’re enrolled, regular deposits are pulled from your checking account into a dedicated savings account by preauthorized electronic transfer. Canceling with Freedom Debt Relief should stop those pulls, but don’t count on the timing lining up with your next scheduled draft. Call your bank separately and place a stop-payment order.
Federal law lets you stop any preauthorized electronic transfer by notifying your bank at least three business days before the next payment. You can do it by phone or in writing, but if you call, the bank can require you to send written confirmation within 14 days, and the verbal order lapses if you don’t.1eCFR. 12 CFR 1005.10 – Preauthorized Transfers A few extra drafts hitting your account while cancellation is being processed is a common headache, and this call prevents it.
Getting Your Dedicated Account Money Back
The balance in your dedicated savings account is your money. Freedom Debt Relief returns whatever remains when you cancel. The account is typically held at a third-party bank rather than at Freedom Debt Relief itself, so the actual refund is released by that bank.
The refund won’t match everything you deposited. Fees earned on debts that were successfully settled will have already come out, and settlement payments already sent to creditors are gone. What’s left after those legitimate charges belongs to you. If the number looks wrong, ask for a full accounting: every deposit in, every fee charged, every payment sent out.
Fees You Still Owe on the Way Out
Freedom Debt Relief’s settlement fee runs 15 to 25 percent of enrolled debt, with the exact percentage depending on your state. Under the federal Telemarketing Sales Rule, no debt relief company can collect a fee until it has actually settled or reduced at least one of your debts and you’ve made at least one payment under that settlement.2eCFR. 16 CFR Part 310 – Telemarketing Sales Rule You do not owe fees on debts that were never settled.
If three of your seven enrolled debts were settled before you canceled, fees are owed only on those three. The fee on each settled debt has to be proportional to the total program fee based on that debt’s share of your total enrolled balance.2eCFR. 16 CFR Part 310 – Telemarketing Sales Rule A flat fee or a charge tied to unsettled debts is a red flag worth escalating.
What Happens to Debts That Were Never Settled
This is where mid-program cancellations get painful. Any debt Freedom Debt Relief hadn’t settled is still yours to deal with, and it has been growing. Debt settlement programs typically tell you to stop paying creditors directly while negotiations happen, so unsettled balances are almost always bigger than when you enrolled, thanks to interest and late fees.
Creditors don’t have to wait for a settlement company. They can send accounts to collections, report missed payments to the credit bureaus, or file suit at any point while you’re enrolled. After you cancel, you’ll need to reach each remaining creditor yourself, whether to set up a payment plan, negotiate directly, or explore other options. Some may work with you. Others may have already charged off the debt and sold it to a collector, in which case you’re negotiating with the buyer.
Late payments and collection activity that piled up while you were in the program stay on your credit reports for up to seven years from the date of the first missed payment. Canceling does not undo that damage.
Taxes on Debts That Were Settled
Any debt Freedom Debt Relief settled for less than the full amount generally counts as taxable income for the forgiven portion. Creditors must report canceled debts of $600 or more to the IRS on Form 1099-C, and you’ll receive a copy to include on your return for the year of the cancellation.3Internal Revenue Service. About Form 1099-C, Cancellation of Debt
There’s a meaningful exception. If your total liabilities exceeded the fair market value of your total assets at the time of the forgiveness, you were insolvent, and you can exclude the forgiven amount from income up to the extent of that insolvency.4Office of the Law Revision Counsel. 26 U.S. Code 108 – Income From Discharge of Indebtedness Many people in debt settlement do qualify. You claim it by filing IRS Form 982 with your return.5Internal Revenue Service. What if I Am Insolvent The tax bill from earlier settlements doesn’t vanish because you left the program, so if you’re unsure about the insolvency math, talk to a tax professional before filing.
If Freedom Debt Relief Pushes Back
Outright refusal to cancel would be unusual given the company’s stated no-penalty policy. Disputes are more likely to involve how much you owe in fees on already-settled debts or how long it takes to release your dedicated account balance. Put your position in writing and attach copies of the cancellation notice, delivery receipts, and account statements that support it.
Check your original contract for a dispute resolution clause. Many debt settlement agreements require mediation or arbitration before either side can sue. If those don’t resolve it, or if the contract doesn’t require them, a consumer protection attorney can review the case; many offer free initial consultations and some take contingency cases when there’s a clear TSR violation.
You can also file a complaint with the Consumer Financial Protection Bureau at consumerfinance.gov/complaint or by calling (855) 411-2372.6Consumer Financial Protection Bureau. Submit a Complaint The CFPB has enforcement authority over debt relief companies, including under the TSR.7Consumer Financial Protection Bureau. CFPB and Seven State Attorneys General Sue Debt-Relief Enterprise for Illegally Swindling Financially Struggling Families Your state attorney general’s office may also accept complaints and sometimes mediates disputes with consumer businesses.
Where to Go After You Cancel
Leaving debt settlement doesn’t leave you without options. A nonprofit credit counseling agency can review your finances and, where it fits, set up a debt management plan. You make one monthly payment to the counseling agency, which distributes it to your creditors, usually with lower interest rates or extended terms rather than principal reduction. Creditors on the plan generally halt collection efforts and waive late fees.8Consumer Financial Protection Bureau. What Is the Difference Between Credit Counseling and Debt Settlement Credit counselors don’t ask you to stop paying creditors, and the arrangement usually doesn’t produce taxable canceled debt.
If the debt is beyond what any payment plan can realistically fix, bankruptcy is worth discussing with an attorney. Chapter 7 can discharge most unsecured debts; Chapter 13 sets up a court-supervised repayment plan of three to five years. Bankruptcy has its own credit consequences, but for someone already carrying months of missed payments and collections from a failed settlement program, the incremental hit may be smaller than it looks.