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Freedom Debt Relief Review 2023

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Freedom Debt Relief Review 2023

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Updated Dec 20, 2022 12:05PM PST

Written by Kathy Hinson Lead Assigning Editor Personal finances, credit scoring financial management and debt Kathy Hinson leads the Core Personal Finance team at NerdWallet. Prior to joining NerdWallet, she worked for 18 years at The Oregonian in Portland in capacities such as chief of the copy desk and team editor and designer. Her previous experience included copy and news editing for several Southern California newspapers, including the Los Angeles Times. She earned a bachelor's degree in journalism and mass communications from the University of Iowa.

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Freedom Debt Relief, a debt settlement services provider, negotiates with creditors to reduce the amount of unsecured debt you are obligated to.

is among the various debt relief options consumers have. It is worth considering whether you might qualify for another debt solution and compare costs. Also, think about what Chapter 7 bankruptcy might wipe off more debtfaster.

In this article:

What is Freedom Debt Relief? Freedom Debt Relief Works

How to qualify

Freedom works with customers who have debt from medical bills, credit cards and personal loans and personal student loans and other types of unsecure debt. Generally, you have to be in possession of a minimum total debt balance of $7,500 to qualify, but certain states have laws that require higher requirements for minimums.

Similar to other debt relief businesses, Freedom cannot help clients with debt that is collateral, like a mortgage or car loan. The company is also unable to help with the debt arising from federal student loans.

A typical new customer has the average amount of $30,000 in unsecured debt across eight to nine credit accounts once they have enrolled with Freedom, says Sean Fox, the company's co-president. The amount of unsecured debt can be from $100,000 to more, with some customers have 20 or more credit cards, Fox adds.

The debt settlement process

You can go online or contact them to discuss an evaluation of your debts and suitability for the program with an Freedom representative. After that, you'll receive a program overview call, which outlines the settlement plan, and be given an agreement and disclosures to sign. This is followed by an onboarding phone call.

After you've enrolled your debts in the plan, you are no longer making payments to the accounts. Instead, you establish an account that is specifically designed to hold payments for creditors. You'll be the owner and manager of the account and make monthly installments into it. Freedom works with you to determine the amount to be every month deposited into the account. The amount will be determined by your financial capacity and the total amount of indebtedness, according to the company.

If you do not pay a creditor, you become delinquent on that account. There are late fees and interest charges plus your credit rating decreases. Delinquent accounts stay on your credit reports for seven years.

As the money accumulates in the designated account, Freedom begins negotiating with the individual creditors on your behalf in an effort to convince them to take less than what you owe. The idea is that , after several months of insufficient payment the creditor will be driven to settle for a lower sum rather than risk getting nothing at all.

If a creditor agrees to the lower payoff amount then you must pay the creditor in either by lump sum or installments, from your dedicated account. Then, you pay the fee for Freedom Debt Relief for its service.

Cost

According to laws, Freedom cannot charge upfront charges; instead it charges an amount whenever it has reached a settlement with a creditor, and you have approved the settlement and made at least one payment on it.

The fees range between 15 and 25%; it's determined by the size of debt enrolled and could vary according to the regulations of your state. If a person pays off a credit card with a balance with a balance of $3,000 for example, would pay between $750 and $1,250 to Freedom for its service.

Additionally, there's a one-time charge of $9.95 to establish the special-purpose account, and a monthly fee of $9.95 that covers account servicing, Fox says. These fees are charged by the company hosting that account, not by Freedom.

Time frame

Freedom says most customers receive their first payment within three months, but it may take longer based on the amount you save each month, the number of accounts you have enrolled into the program, and the amount of debt for each one. Freedom says clients who commit to on-time monthly payments into their designated accounts resolve all of their outstanding debts within 2 to 4 years on average.

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Freedom Debt Relief at a glance

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What should you be aware of concerning Freedom Debt Relief

Reliable to customer complaints

Freedom is rated A+ rating on the time of the . It has received over 350 complaints from customers over the past three years, including complaints about issues with their service as well as issues with billing and collection. The company also boasts a 100% response rate to complaints from customers through the BBB.

Lawsuit

As of 2017, the firm was sued by the Consumer Financial Protection Bureau, which alleged the company charged people who did not pay their debts according to the terms they promised, made people settle their own debts, and misled consumers about the fees.

In July of 2019, Freedom settled the CFPB lawsuit , signing a settlement agreement that it would pay 20 million damages to consumers affected and the civil penalty of $5 million. [0] Consumer Financial Protection Bureau . . Accessed Nov 12 20th, 2020.

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The risks of the process of debt settlement

The potential risks and drawbacks with debt settlements include:

It hurts your credit

Since you're required to stop paying your outstanding debts in order to be enrolled into the debt settlement program these accounts will show as delinquent on your credit reports. Your credit scores will be severely affected, potentially affecting future credit applications and even job. Delinquent accounts can be held for seven years, or more, are also considered delinquent, as are the accounts that are charged by lenders.

It's not guaranteed.

Certain creditors might offer to sell the debt you owe to a third party collection agency or the buyer of debt. Freedom states that it negotiates with the third-party and may coach some clients to settle directly with creditors. However, the results may differ.

Fees and interest accumulate

Over the period in which you're in a debt settlement program there will be additional fees for late payments and interest on your debt. If you fail to remain in the program for long enough to finish it or if Freedom does not negotiate a settlement, you'll be stuck with the balance.

You could still get a call from debt collectors

When you don't pay your bills and you stop paying your bills, you could face aggressive collection efforts or legal action from creditors. Freedom says it encourages clients to notify creditors that they are working with the settlement firm and to send messages to Freedom via their personal online dashboard.

A forgiven debt can be tax-deductible

Because the IRS accepts forgiven debt as taxable income It's possible that you'll have to pay taxes on the debt you no longer had to pay after settling. Some creditors will provide an Annulment of Debt form . One exception is if you are insolvent (have more liabilities than assets) when you settle your debts with your creditors.

Talking to a tax professional or lawyer for further guidance is recommended.

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Freedom Debt Relief vs. other alternatives

Before settling on a debt settlement option be aware of other options, which include debt payoff , and other alternatives:

Debt management plan

This may be a better option for someone with an income steady enough to pay back credit card debts in three to five years. You'll pay a nonprofit credit counseling company to consolidate your debts into one monthly installment with a lower rate of interest. However, you won't be able to access to new credit or the ability to utilize your credit cards until the time of payoff.

Debt consolidation

With this option, you'll transfer multiple debts into one new debt, usually via a account that allows you to transfer balances or . The new debt will have an interest rate lower than the old ones and could allow you to pay off debts faster. But it often requires an excellent or good credit score to be able to get the best terms.

Bankruptcy

The bankruptcy process can help you pay off your debt with protection from a federal court. Most people can eliminate their non-secured debts in 3 to 6 months, but not everyone qualifies. If you're delinquent on debt, declaring bankruptcy can stop the solicitations from debt collectors as well as lawsuits against the debtor. Your credit may take a hit, similar to debt settlements, but research shows credit scores can rebound within a year.

DIY debt settlement

You can pick up the telephone or contact your creditors to negotiate with them yourself. Like using a debt settlement company it's not guaranteed to succeed however it can help you save time and money.

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Should you pay off your vehicle prior to selling it? Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our goal is to help you make better financial decisions by offering interactive financial calculators and tools, publishing original and objective content. We also allow you to conduct research and compare information for free to help you make financial decisions with confidence. Bankrate has agreements with issuers including, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Make money The products that appear on this website are provided by companies that compensate us. This compensation could affect how and when products are featured on the site, such as, for example, the sequence in which they appear in the listing categories and other categories, unless prohibited by law. Our mortgage, home equity and other home lending products. But this compensation does affect the information we provide, or the reviews appear on this website. We do not contain the universe of companies or financial offers that may be open to you.

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3 minutes read. Published April 18, 2022

Written by Kellye Guinan. Written by personal and Business Finance Contributor

Kellye Guinan is a freelance editor and writer who has more than 5 years experience working in the field of personal financial matters. She is also a full-time worker at her local library where she assists the community gain access to information on financial literacy, in addition to other topics.

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Rhys has been editing and writing for Bankrate from late 2021. They are passionate about helping readers gain confidence to control their finances with precise, well-researched and reliable facts that break down otherwise complex topics into manageable bites.

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If you are still owing money on your car, there are a few steps you should take before selling it. But be cautious that negative equity could be a major impact on your finances. This is a viable option but it can mean paying a lot more money than you're required to. When to pay off your car prior to selling it all cases, it is best to pay off or clear your loan prior to selling it or trading it into. The primary concern will be whether or not you've got negative or positive equity in your loan. With negative equity you'll need to pay the auto loan before you trade with your car. Possible equity On an auto loan means that you owe less on the car than it is worth. If, for instance, you've got $10,000 remaining on your loan but your car has a value of $15,000 then you've got $5,000 in positive equity. If you decide to trade in your car, the positive equity can be put towards your next car to be used as an down payment, which will reduce the amount you have to borrow. Negative equity Negative equity can be described as the other. If you still owe $10,000 on your loan however your car has a value of $8,000, you'll have $2,000 of negative equity. This is what lenders and columnists in the field of financial advice call " ." It's something you do not want to find yourself in. If you trade in your car, you will be required to pay for the remaining out of your pocket. In addition, breaking even is essential as it stops you from converting negative equity into the new loan and the cost of a car you are not driving. What is the best way to sell or trade in a car you still owe money on People trade with and sell vehicles with liens often. In fact, dealerships may advertise paying off your car after upgrading to more recent model. However, it's more complicated than just switching one vehicle for another. Find out the value of your car through websites like Edmunds as well as Kelley Blue Book. Check out cars that have similar trims and compare average selling points within the same area. Determine your budget for your next car and how much you owe on your current one. If you're owed more than you're likely to get through trading it in, consider other options. Take care to collect maintenance records and other paperwork. This may help increase the value of your vehicle as a trade-in since it can prove that it's taken care of. Check out trade-in deals from dealerships -- you don't have to visit one location. Everybody uses the word "trade-in," but really it's selling your vehicle. It is possible to search for quotes from different companies to get the best price. Get everything in writing and especially if the dealer promises to pay off the loan. Be sure you have a copy of the offer. It's still your responsibility to pay the balance of your loan and follow-up and make sure you're lender is paid when you have traded in your car. Alternatives to selling the car If you're in the red on your loan and you want to trade it in, this is unlikely to be the most effective option. Instead, consider selling your vehicle to private buyers and paying for the loan down or refinancing it at a lower cost. Utilizing a private buyer, instead of dealers, can help you for more. However, you'll have to manage the process of paying the lender and transfer the title on your own. This is something the dealership typically handles for you, but it could be a hassle. The process of paying off the loan isn't an option for everyone. But if your payments aren't currently making you rich, put aside some money to reach a point of break-even. In this way, selling your vehicle in won't require taking any of the remaining loan balance onto your new car loan. Also, you should try to . Don't extend the loan duration in order to lower your payment -which increases the risk that you'll end up in the red. Instead, reduce the total amount you have to pay. The next step is if you're not over the limit on your loan, trading in your car for a less expensive option may be the right solution. If you do have negative equity, try refinancing instead -- it might enable you to lower your interest rate so you pay less overall. But, most importantly, don't transfer the remainder of your loan into another one. In collaboration with your lender or sell your car or find an alternative option in order to not take on more debt if you can help it. Find out more

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Written by Personal and business finance Contributor

Kellye Guinan is a freelance editor and writer who has more than 5 years experience working in the field of personal finance. She also works full-time as a employee at her local library where she helps people in her community get information about financial literacy, as well as other topics.

Edited by Rhys Subitch Edited by Auto loans editor

Rhys has been editing and writing for Bankrate since the end of 2021. They are passionate about helping readers gain confidence to take control of their finances through providing concise, well-studied and well-documented data that breaks otherwise complicated topics into bite-sized pieces.

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A graduate's guide to buying a car Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our aim is to assist you make better financial choices by offering you interactive tools and financial calculators that provide objective and original content. This allows you to conduct your own research and compare information at no cost - so that you can make sound financial decisions. Bankrate has partnerships with issuers including, but not limited to American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Earn Money The deals that are displayed on this website are provided by companies that pay us. This compensation can affect the way and where products appear on this website, for example the sequence in which they be listed within the categories of listing and other categories, unless prohibited by law for our loan products, such as mortgages and home equity, and other home loan products. But this compensation does have no impact on the content we publish or the reviews appear on this website. We do not cover the universe of companies or financial offerings that might be available to you. Kali9/Getty Image

4 min read . Published 16 September 2022

Written by Allison Martin Written by Allison Martin's work started over 10 years prior to that as a digital content strategist. She's published in numerous prestigious financial publications, including The Wall Street Journal, MSN Money, MoneyTalksNews , Investopedia, Experian and Credit.com. Edited by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate from late 2021. They are dedicated to helping their readers feel confident to manage their finances by providing concise, well-researched and well-written information that breaks down otherwise complex subjects into digestible pieces. The Bankrate promise

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At Bankrate we strive to help you make better financial decisions. While we adhere to strict journalistic integrity ,

This post could contain some references to products offered by our partners. Here's an explanation for how we make money . The Bankrate promise

Established in 1976, Bankrate has a long track record of helping people make smart financial choices.

We've earned this name for over four decades by demystifying the financial decision-making

process, and giving people confidence about the actions they should do next. Bankrate has a very strict ,

You can rest assured that we're putting your interests first. All of our content is authored with and edited

who ensure everything we publish is objective, accurate and reliable. We have loans journalists and editors focus on the things that consumers are interested about most -- various types of loans available and the most competitive rates, the most reliable lenders, the best ways to repay debt, and more -- so you'll be able to feel secure when investing your money. Integrity of the editing

Bankrate has a strict policy standard of conduct, which means you can be confident that we'll put your needs first. Our award-winning editors and journalists create honest and accurate information to assist you in making the right financial decisions. The key principles We respect your confidence. Our mission is to provide our readers with truthful and impartial information, and we have standards for editorial content in place to ensure that happens. Our editors and reporters thoroughly fact-check editorial content to ensure the information you're reading is correct. We keep a barrier with our advertising partners and the editorial team. The editorial team of Editorial Independence Bankrate does not receive compensation directly from our advertisers. Editorial Independence Bankrate's editorial team writes on behalf of YOU as the reader. Our aim is to provide you the most accurate advice to help you make intelligent financial decisions for your personal finances. We adhere to strict guidelines in order to ensure that our editorial content isn't affected by advertisements. Our editorial team receives no directly from advertisers, and all of our content is verified to guarantee its accuracy. So, whether you're reading an article or reviewing it is safe to know that you're getting reliable and reliable information. How we make money

You have money questions. Bankrate has the answers. Our experts have been helping you manage your finances for over four decades. We strive to continuously provide our readers with the professional advice and the tools required to make it through life's financial journey. Bankrate follows a strict policy, which means you can be confident that our content is truthful and reliable. Our award-winning editors, reporters and editors create honest and accurate information to assist you in making the right financial decisions. Our content produced by our editorial team is factual, accurate, and not influenced from our advertising. We're open about how we are able to bring quality content, competitive rates, and practical tools for you by explaining how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for the promotion of sponsored goods and, services, or through you clicking specific links on our website. Therefore, this compensation may influence the manner, place and in what order the products are listed within categories, except where the law prohibits it for our mortgage, home equity, and other home loan products. Other factors, like our own website rules and whether the product is offered in your area or at your own personal credit score may also influence how and where products appear on this site. We strive to provide the most diverse selection of products, Bankrate does not include the details of every credit or financial product or service. It's your turn to walk through the halls soon to be awarded your diploma and now you're ready to enter the real world. Buying a car may be a part of the plan if you are going to reside in an area where public transportation isn't the best way to get around. But before you head to the dealer to select the ideal car, you should do some research and obtain preapproved the purchase so that you make an informed decision. Pick the right car for your needs post-graduation. prospect of owning the car of your dreams is thrilling. But, it is important to avoid getting sidetracked, or you might choose a car that is in line with your preferences but isn't practical. The commute How long will your commute from and to work? If your commute is long, you may want limit your searches to cars with high fuel economy ratings -- especially with how gas prices are trending. It's currently around $3.70 per gallon for regular gasoline according to AAA which is slightly lower than last month's average of $3.96. Still, this figure is much higher than the average price per gallon of $3.18 only one year ago. Visit the and use its online tool to view the annual average fuel cost for any vehicles you are contemplating. You can narrow your search down by year, make and model, or browse suggestions for the most efficient cars. Dimensions and other features Are compact cars enough or do you require something larger, such as the pickup truck or crossover? What about features -- are certain ones a "must-have" on your list? If you recently landed a job with a good salary that you will start soon after graduating, you may be able to with the most recent technology and features. Still, you could be better off with a smaller ride without all the features until you start working and get more established in your career. Safety features How safe is the vehicle you're considering? Request a copy of the car's . It contains maintenance records and provides information on whether the car has been involved in any accident. The is another good resource. You can look up safety ratings and check whether recalls have occurred by typing in the vehicle's model and model, or VIN. Choose between used and new There is a lot to love about a new car. It's clean, in great shape and smells good. However, some aren't as trustworthy. Plus, you could buy an extended warranty at around $1500, and get peace of mind knowing you're safe in the case of a major mechanical malfunction. Consider the following when deciding between a used and new vehicle: New vehicles have a manufacturer's warranty. This coverage could save you a lot of money in the event that your vehicle breaks down and requires major repairs during the initial several years that you own it. New cars usually have the latest technology. You may also discover a second-hand car with your desired features. Some used cars can be low-mileage. Therefore, if you don't experience numerous mechanical issues over time, maintenance costs will likely be lower and you'll be able to get a better price. Some used cars are . They receive the manufacturer's seal of approval after being brought up to a set standard mechanically and have a limited factory warranty. Take a look at the entire cost of car ownership Beyond the monthly payment for fuel, as well as insurance premiums for autos and also take into repair and maintenance costs. In 2021, the average cost of maintenance, repairs and tires was around 9.55 cents per mile as reported by . Still, these costs vary depending on the type of vehicle and you can utilize the to get an idea of how much you could spend over time. Annual registration renewal expenses, which generally range from under $20 to around $200 per year, are important to be aware of. Certain states charge a flat fee and others rely on the vehicle's age, energy efficiency, or weight in calculating registration fees. Research cars and get financed before visiting a dealership. The majority of dealerships offer financing in-house however, it's better to get it before you start shopping for the car. You want to know what you're able to spend and also get quotes from your bank or credit union will assist you in deciding on the best price for your purchase. You'll also have more leverage when . The purchase won't be contingent on your ability to secure financing through the dealership, and you'll be able to behave as the cash buyer. Learn the advantages of buying as opposed to. leasing There's plenty of chatter around and which option is better. There are a few advantages of both options The lease payment on the latest cars are typically less expensive. If your eyes are set on a particular vehicle which is expensive and you're not sure if you'll be able to pay for the monthly installments if you get a lease. There's a manufacturer's warranty in the event that you purchase a brand-new car. It typically provides coverage until 36,000 miles, or three years, meaning you don't be required to spend an enormous amount on repairs should there is a mechanical problem that arises. There are no mileage restrictions when you purchase a car. If you opt to lease the car, you'll be restricted to a range of 10,000 and 15,000 miles per year , or you could end up paying high mileage charges. They can cost you between 10 cents and $25 cents for each mile or more, subject to the terms in the agreement. The car is yours after the loan is paid in full. Lease agreements work a little differently, but. You'll need to return the vehicle to the dealer once the lease ends unless you decide to . In the end, purchasing a car during college is among the biggest purchases you will make. To ensure that you are getting the best deal, you want to do the necessary research to locate an automobile that is compatible with your lifestyle and your budget. It is equally important to get preapproved for financing before you visit any dealership. You should also evaluate the advantages of buying or leasing to determine which is the best option. Find out more

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Allison Martin's work began over 10 years ago when she was an online content strategist and she's since been published in various top financial media, including The Wall Street Journal, MSN Money, MoneyTalksNews , Investopedia, Experian and Credit.com. The article was edited by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate since late 2021. They are passionate about helping readers gain the confidence to control their finances through providing clear, well-researched facts that break down otherwise complicated topics into digestible pieces.

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Chapter 7 vs. Chapter 13: What Bankruptcy Option Is Best for You?

Chapter 7 bankruptcy is faster and more affordable than Chapter 13 bankruptcy, but it's not the most suitable option for everyone.

Written by Sean Pyles Senior Writer | Personal finances and debt Sean Pyles leads podcasting at NerdWallet as the host and producer of NerdWallet's "Smart Money" podcast. In "Smart Money," Sean talks with Nerds from the NerdWallet Content team to answer the questions of listeners about their personal finances. With a particular focus on sensible and practical advice on money, Sean provides real-world guidance to help people improve their financial lives. Beyond answering listeners' money concerns on "Smart Money" Sean also interviews guests who are not part of NerdWallet and creates special segments on topics like the racial wealth gap and how to begin investing, and the background of college loans.

Before Sean lead podcasting for NerdWallet, he covered topics concerning consumer debt. His work has been published in USA Today, The New York Times and elsewhere. When Sean isn't writing about personal finances, Sean can be found working in his garden, going for walks, or walking his dog for long walks. He is based at Ocean Shores, Washington.

Last updated Dec 14th, 2021 at at 4:51 PM PST

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Bankruptcy is among the most efficient and fastest ways to find . Most consumers who follow this route are able to file in Chapter 7 bankruptcy or Chapter 13 bankruptcy. The best option will depend on the individual's assets and financial objectives.

To help you understand the differences of Chapter 7 and Chapter 13 bankruptcy, here's a breakdown of the two types and who they're suitable for. Whatever you select, you must:

Your monthly debts to consumers are greater than 50% of your monthly take-home earnings.

You're facing lawsuits from creditors.

You see no way to pay off your debt in five years.

What's what's the distinction between Chapter 7 and Chapter 13 bankruptcy?

The major differences between the two types of. bankruptcy is the criteria for eligibility, the way debts are resolved and the duration of time.

Look over this table for an understanding in a glance:

Chapter 7

Chapter 13

Form of bankruptcy liquidation.

Form of bankruptcy: Reorganization.

Eligibility:

You have to pass the means test, which looks at your expenses, income and the size of your family.

There is no way to prove that you have had a Chapter 7 discharge in the or Chapter 13 in the past six years.

It is not possible to have filed a bankruptcy petition (Chapter 7 or 13) within the past 180 days, and it was rejected for certain reasons for example, failing to show up in court or to follow the court's orders.

Eligibility:

Unsecured loans cannot exceed $419,275 and secured debt must not exceed $1,257.850.

Must have regular income and have current tax returns.

It is not possible to have had an Chapter 13 filing in the last two years, or Chapter 7 within the past four years.

Cannot have filed a bankruptcy petition (7 or 13) in the preceding 180 days. The petition was dismissed for a variety of reasons, such as failure to appear or not complying with court orders.

What is the time it takes to get a discharged: It is usually less than six months.

How long does it take to achieve a discharge: Usually, three to five years, depending on the repayment program.

The credit report's mark It remains in your credit file for from filing date.

The credit report's mark The mark remains in your credit file for the time period from the date of filing.

Benefits:

The fastest methods to resolve overwhelming debt.

Filing a bankruptcy petition halts collection efforts and legal action from creditors.

Benefits:

Can help you resolve your debts while retaining certain assets or falling behind on secured debts, like the auto loan or mortgage.

Filing a bankruptcy petition halts the collection process and prevents legal action from creditors.

Drawbacks:

Although rare, the trustee can sell nonexempt property.

Generally for unsecured debt; is not protected against repossession or foreclosure.

Drawbacks:

The length and cost of the repayment plan can be challenging to many filers.

Which one is better? 7 or Chapter 7 rather than Chapter 13?

The best option for you depends on your situation financially and goals.

For determining whether Chapter 7 or Chapter 13 bankruptcy is right to you . You'll want to ensure that the debts you are struggling with can be handled by bankruptcy, and that you're in a position to benefit from the fresh start bankruptcy can provide.

Most consumers opt for Chapter 7 bankruptcy, which is quicker and less expensive than Chapter 13. A majority of people who file for bankruptcy qualify for Chapter 7 after taking the examination of the household's finances, income and size to determine eligibility. Chapter 7 bankruptcy discharges, or eliminates, debts that are eligible like credit card debts as well as medical debts and personal loans. Other debts, including student loans and taxes, typically aren't considered eligible. Additionally, Chapter 7 doesn't offer a option to pay on secured loan payments, like an auto or mortgage loan, and it doesn't protect those assets from foreclosure or repossession.

In some instances, a bankruptcy trustee -an administrator who cooperates with bankruptcy courts to represent the estate of the debtor -- may sell items that are not exempt, i.e. items that aren't covered by bankruptcy. Nonexempt items vary according to state law.

Chapter 13 bankruptcy may be ideal for those who don't meet the requirements for the Chapter 7 filing, for instance, if their income is excessive. For those who do qualify for Chapter 7 may still choose to apply in Chapter 13 because they want to keep certain assets or avoid getting caught up on their mortgage payments. But, Chapter 13 repayment plans are challenging: All disposable income after certain allowances must be directed towards repaying debt over a period of three or five years.

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About the author: Sean Pyles is the executive producer and host on the NerdWallet's Smart Money podcast. His work has been published on The New York Times, USA Today and elsewhere.

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Prepaid Debit Cards Are Popular However, they have their own drawbacks.

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Prepaid debit cards are popular But they do have some drawbacks

Written by Spencer Tierney Senior Writer | Certificates of Deposit and ethical banking, as well as banking deposit accounts Spencer Tierney is a consumer banking writer at NerdWallet. He has been writing about personal finance since 2013 with a focus on certificates of deposit and other banking-related subjects. The work he has written for him was featured in The Washington Post, USA Today, The Associated Press and the Los Angeles Times, among other publications. He is based in Berkeley, California.

Updated August 10, 2016

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Visit a convenience store like 7-Eleven or CVS Pharmacy and you're likely to find some pre-paid debit cards hung on the rack.

These cards, that are used to budget or as checking account substitutes have become more popular. Purchases on cards from the largest prepaid issuers increased 15.7% in 2014 compared to the previous year according to the Nilson Report, which analyzes payment industry data.

>> MORE:

Despite their popularity they do face many issues. In the last year both suffered technical issues that led to cardholders being locked from their account for as long as seven days. During that time, any money on these cards, even income that was directly transferred onto them was inaccessible. Even in non-shocking situations they have many drawbacks.

Frequent fees

Prepaid debit cards tend to charge fees for features you are used to with a checking account, like free ATM usage, customer service and online and mobile services. In contrast to checking accounts, prepaid cards often don't offer the option of avoiding monthly fees.

>> MORE:

Janice Elliot Howard, a writer in Atlanta initially had a prepaid card that cost her a small fee each time she purchased something. After she realized how much the card was costing her, she quickly canceled the card and purchased one which doesn't charge transaction charges.

It isn't possible to avoid any fees, however.

"The disadvantage is the ATM charge [for cash withdrawals], but I don't do it often," she says.

One benefit of many debit cards that are prepaid is that they don't permit overdrafts, or charge fees for overdrafts. With a checking account you could be the equivalent of $30 or $35 if you spend more money than you have within your accounts. But the frequent charges for transactions or ATM withdrawals could add up.

It's not always easy to find out the details of your card.

Elizabeth Avery bought a prepaid debit card at a drugstore for an upcoming trip overseas but later realized that the card couldn't be used abroad.

"I find that the fine prints are where I'm seeing problems," says Avery, founder of travel website Solo Trekker 4 U and an investment banker for private equity in Washington, D.C. She had planned to use her card at ATMs in the international market to withdraw cash, but found no mention on the packaging's exterior that it was only to be used in the US.

But that's not all the information that can be missing.

"The disclosures for prepaid credit cards sold at retail stores don't demand that all the fees need to be mentioned on the packaging outside," says Thaddeus King who is the head of the consumer banking initiative within The Pew Charitable Trusts in Washington, D.C.

The protections aren't there yet

Credit cards that are pre-paid, similar to debit and credit cards are associated with payment networks such as Visa or MasterCard. This means that you are protected against fraud for card purchases , but not the broader protections you can get from a bank account.

"When it is about bill pay or ATM transactions, those are not processed on either the Visa and MasterCard network," King says.

Other payment platforms offer similar exclusions. For these transactions, King says you must trust the disclosures of your card that may not provide protections , unless they are specifically for purchases.

Prepaid debit cards are also not legally required to have insurance from the Federal Deposit Insurance Corp., or FDIC, which is how customers can recover their money should their bank or issuer is insolvent. While many issuers of prepaid cards offer protection on their own but their cards' agreements with their customers might stipulate that their conditions are subject to change at any point.

The checking accounts, however they must have more coverage because of a that protects electronic and ATM transactions. They must also be insured by the FDIC.

A good thing for those who have prepaid debit cards could be coming soon. According to the Consumer Financial Protection Bureau plans to release its plans later this year, which would increase protection against fraud on the cards to be comparable to those for checking accounts and debit cards.

"Prepaid debit card users deserve the same protections afforded debit card users," says Christina Tetreault who is a lawyer at the office of Consumers Union in San Francisco.

Author bio Spencer Tierney is a writer and NerdWallet's official authority on certificates of deposit. The work of Spencer Tierney has been featured by USA Today and the Los Angeles Times.

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Written by Rebecca Betterton Written by Auto Loans Reporter

Rebecca Betterton is the auto loans reporter for Bankrate. She is a specialist in helping readers with the ways and pitfalls of using loans to buy a car.

The edit was done by Rhys Subitch Edited by Auto loans editor

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The credit rating of your, vehicle you purchase, and your lender all play an important role in the price of the auto loan. The best lender to get a loan from will require several applications and additional study prior to buying. However, getting preapproved grants you more bargaining power when you visit the dealer -- and it could help you obtain a lower-cost car loan that can save you thousands worth of money over the loan period. Five steps to get a low-cost car loan Make sure you are prepared to look around for a loan by knowing your budget and credit score, as well as the ideal loan term. These steps can help guide you toward an affordable and, hopefully, affordable -in the long run. lender. 1. Make sure you know your budget Experts advise that you do not spend more than 20 percent of your per-month income for auto loan costs, which includes your monthly loan payment, fuel , and other related costs. (The recommended maximum for used and new car installments of 15 and 10, respectively.) Ideally, you should walk into the showroom with a precise concept of what you want, and include the additional . Stay within your budget while choosing a vehicle that is suitable for your needs. Make use of sites such as Edmunds as well as Kelley Blue Book for car estimations of reliability and price. The interest rates for new vehicles are generally less than on however used cars typically cost less overall. 2. Review your credit report Lenders consider your credit score heavily when assessing your capability to pay back a loan. The higher your credit score is, the lower your interest rate. If you're looking to qualify for the best rate the lender offers, an excellent score is usually needed. You can pull your score as well as credit history through Equifax, Experian and TransUnion or for free at . You can try to get your credit score in the most favorable possible condition before trying to get an automobile loan. Some ways to include: Filing disputes with the credit bureaus. If you notice any inaccuracies on your credit report, file complaints with the correct credit reporting agency immediately. Any negative information you find on your credit report inaccurately reported can drag your credit score down. Being current with all outstanding debt balances. Payment history accounts for 35 percent of your credit score, so it's vital to bring outstanding accounts up to date and make timely payments on all outstanding debts moving forward. Reducing your unpaid debt balances. You should aim to bring your credit utilization ratio of 30 % or lower to improve the credit rating. It is also possible to reduce the rate of credit utilization. Refrain from applying for new credit. Refrain from applying for any other type of loans or credit cards. Multiple hard inquiries in an unspecified time period can hurt the credit rating. 3. Prequalify with multiple lenders Although many lenders utilize the same factors to determine your interest rate however, they use these factors differently. The most efficient way to find the cheapest deal depending on your credit score is to make an application to several lenders. Find out information from a handful of banks, credit unions, or online lenders, and then evaluate their rates of interest. A quick search will give you an idea of what's out there. Once you've got an idea of what you qualify for, you will have an idea of what your monthly installment will be. If you wish to, you could discuss a backup plan already in place. 4. Make an application for loans within 14 days of the date you apply. Each credit application that you make results in an inquiry on your credit report that dips your score on credit by couple of points and remains on your credit report for up to two years. Hard inquiries also impact the credit rating for up to twelve months, which makes numerous applications within a short time frame detrimental to your credit score. Luckily, an exception to the rule applies for auto loans. Any loan applications submitted within a 14-day window are considered a single inquiry, thus minimizing the dip in your credit score. Keep in mind that loans made after this period could result in more of a decline of your credit rating, and make you ineligible for the best rates. 5. Take the time to calculate If the low annual percentage rate (APR) is appealing but it's not the only thing to be concerned about. The value of the trade-in on your prior car, as well as your and will be a factor in your total price of the new car. After all, the more you pay upfront (and the lesser interest you'll pay in the long runthe lower your car loan will be. Make use of an app to calculate the total amount of interest you will pay and your monthly payment. It's a great tool, particularly when you prequalify with multiple lenders and understand the rates to expect. The majority of car loans are available with lengths of between 24 and . Although a longer duration results in a lower monthly payment, it costs more in the long run due to the cost of interest. Select a loan with the shortest duration you can reasonably manage to reduce the cost. Where to get the cheapest car loan Dealerships collaborate with banks, credit unions as well as online lending institutions to get you financing. To get the cheapest car loan it is important to avoid paying extra interest for the same loan. Banks: If you already have an account opened with a bank, look there for an auto loan. It is possible to score a relationship discount on top of a competitive interest rate. Because most dealers use banks to finance their business and lending, you'll receive the same services . Online lenders: Because online lenders compete with banks and credit unions in order to compete, they typically have the same rates. Best of all, many work with borrowers with , so they can be a good place for low-cost loan even if you don't have an extensive credit background. Credit unions: As they're non-profit, they typically offer competitive rates and similar loan terms as banks. This means that they're among the most affordable options to obtain the auto loan. But since you need to be a member, it may take several monthswith an active account -- before you can apply. Next steps Car loans are among the biggest expenses most people will have and so you must put in effort to find the cheapest car loan feasible. Calculate the monthly payment and total loan cost you can afford before signing off on the purchase of a new car. Research and prequalify with multiple lenders to ensure that you're getting the best deal. Find out more

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Authored by Auto Loans Reporter

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What is the AmEx Send and Split and How Does It Work?

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What is the AmEx Send and Split and How Does It Work?

This feature lets you transfer people money with no fees for transactions, or split up a bill from inside the AmEx mobile application.

Written by Melissa Lambarena Lead Writer | Credit cards credit cards, the debt Melissa Lambarena is a lead writer on the credit cards team at NerdWallet. She has been enthusiastically covering topics related to credit cards for more than six years. Her previous experiences include nine years as a content creator for several publications and websites. With her efforts, she hopes to help users extract benefits from credit cards in order for financial goals such as increasing their budgets, establishing credit, traveling to dream destinations and repaying debt. She writes about these topics along with others in The Millennial Money column featured in The Associated Press. Her work has also appeared in The New York Times, Chicago Tribune, The Washington Post, USA Today and Yahoo Finance, among others. Melissa holds a bachelor's degree in sociology at The University of California, Los Angeles.

Updated October 13, 2022 8:11AM PDT

Written by Kenley Young Assigning Editor Credit scores, credit cards Kenley Young oversees the daily credit cards coverage for NerdWallet. Previously, he was an editor on the homepage as well as a digital content producer at Fox Sports, and before being a front-page editor for Yahoo. He has decades of experience in digital and print media. This includes stints as a copy desk chief as well as a wire editor as well as metro editor of McClatchy. McClatchy newspapers chain.

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A LOT LIKE THIS

This feature of the Send & Split feature within the American Express mobile app lets the cardholders who are eligible to pay funds to share purchases with, or with any Venmo and PayPal user at no extra cost.

So if you're not carrying cash or you're just a few bucks short, you can lean on your credit card, avoiding awkward conversations about how to split the cost of a bill, and also allowing you to pay for the balance at a suitable date. More importantly, you can reduce transaction costs when you do so, save money.

This option is only available exclusively to U.S. consumer credit cardholders. Here's how to use it.

>> MORE:

Send and Split: The fundamentals

As the name of this feature suggests, there are two possibilities split and send.

To do either, you'll have to enroll by signing into the AmEx application, then going to the account tab, and then selecting the "Send & split" option. Once you're enrolled, you'll be required to link the account to either Venmo as well as PayPal account in order to transfer or receive money.

>> MORE:

How do I transfer money using 'AmEx Send'

It is possible to transfer money via the AmEx App, Venmo app or PayPal application. If you choose any of these options, the money will be routed through the "AmEx Send" account that will be created automatically once you join Send & Split.

Sending money from the AmEx app

This option allows you to make use of your AmEx card to make payments to any PayPal or Venmo client without having to pay the typical fees applicable to credit card transactions. (Normally, if you were to use a credit or debit card in this manner via PayPal or Venmo it would cost you an additional fee of around three percent.)

You can add money to the AmEx Send account immediately using your AmEx credit card and transfer it to another Venmo as well as PayPal user. The funds you transfer will show up as a transaction on your card's statement, and will be treated as an actual purchase. However, you do not earn any rewards for the transaction. The terms and conditions apply.

AmEx limit the amount you can add to an AmEx Send account. That amount is identified in the app as "Available to add." AmEx states that it's determined by the card's "rolling 30 day limit on transactions per person that is contained in your card's member agreement," and it's subject to AmEx approval.

Nerdy Tip

The majority of consumers who qualify can add as much as $2,000 to your AmEx Send account. The Platinum Card(r) of American Express can add up to $4,000 and the Centurion card could be used to add up to $5,000. The terms and conditions apply. You can only transfer up to $10,000 in a single transaction through your AmEx send account. The transactions, too, will be subject to a rolling 30 day limit on transactions. Terms and conditions apply. PayPal and Venmo may also limit the amount of money you can send.

Paying with your account on Venmo as well as the PayPal app

To transfer money using Venmo or PayPal you need to add funds into the AmEx Send account to Venmo or PayPal and pay money in the same manner as you would within those apps.

To pay for the transaction change you payment option to the AmEx Send account. The amount you're transferring must be greater than the amount of your Venmo balance. If not you'll be charged the Venmo balance will be your default method of payment.

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How can you split purchases using "AmEx Split"

By using this method you are able to pay for something using your credit card- and earn all the benefits from the purchase- and then split the cost with fellow Venmo as well as PayPal users. There is no cost for splitting the cost of purchases.

In the AmEx app, you choose a single purchase or multiple purchases that you can split among up to 20 people. You can split the cost equally or create a custom allocation. The people who are affected will receive a payment request through Venmo or PayPal like they normally would.

If they reimburse you it is your choice whether you'd prefer the funds to be transferred directly to your credit card account as a statement credit or into an account with PayPal or Venmo account. If you aren't reimbursed, you're still accountable for the amount charged to the card. The original transaction may be subject to charges or interest. Conditions apply.

For a hefty expense that isn't paid in full, the cost of interest could eat at the value of any benefits you earn from the transaction. If that was the incentive to pay the bill then it doesn't serve the purpose. To keep your finances on track, you should only use this feature to split purchases with people you trust to pay you back.

Nerdy Tip

AmEx Send and AmEx Split are compatible with any Venmo or PayPal user. They don't require you the requirement to have American Express cardholders.

>> MORE:

About the author: Melissa Lambarena is a credit cards writer at NerdWallet. The work she writes has been highlighted on The Associated Press, New York Times, Washington Post and USA Today.

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The reason nearly every purchase should be made using a credit Card

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The reason nearly every purchase should be made with a credit Card

Credit cards are secure and convenient they can help you build credit, they help budgeting more easily and also are rewarded with rewards. And no, you don't have to go into the debt trap, and you aren't required to pay for interest.

Written by Virginia C. McGuire Virginia is a former credit card author for NerdWallet. She is a journalist who has covered personal financial, business, real estate as well as architecture and design. Her work has been published in The Philadelphia Inquirer, The New York Times, The Awl and Mental Floss.

and Paul Soucy Lead Assigning Editor Credit scoring, credit cards and personal financial Paul Soucy has led the Credit Cards content team at NerdWallet since 2015. He served as an editor for USA Today, The Des Moines Register and the Meredith/Better Homes and Gardens family of magazines for more than 20 years. He also established a profitable freelance editing and writing business that focuses on personal and business finances. He was editor of USA Today Weekly International Edition for six years, and was awarded the highest award by ACES: The Society for Editing. He holds a bachelor's in journalism, as well as a Master of Business Administration. His home is in Des Moines, Iowa, with his fiancée, his two sons, and the dog Sam.

Updated on Nov. 3, 2022.

Editor: Paul Soucy Lead Assigning Editor Credit cards, credit scoring Personal finance Paul Soucy has led the Credit Cards content team at NerdWallet since 2015. He worked as an editor at USA Today, The Des Moines Register and the Meredith/Better Homes and Gardens family of magazines for more than 20 years. He also built a successful freelance editing and writing practice that focuses on personal and business finances. He was editor of the USA Today Weekly International Edition for six years, and was awarded the most prestigious award of the year from ACES: The Society for Editing. He has a bachelor's degree in journalism and a Master of Business Administration. His home is in Des Moines, Iowa, with his wife, two sons and the dog Sam.

Many or all of the products featured here are from our partners who compensate us. This impacts the types of products we review and where and how the product appears on the page. However, this doesn't affect our opinions. Our opinions are entirely our own. Here is a list of and .

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Cash was the most popular option. People paid for everyday purchases using cash or checks (which are functionally equivalent to cash), and they saved credit cards for big, infrequent purchases -- If they were carrying credit cards at all. Nowadays, credit cards are accepted virtually everywhere, and some do not carry cash at all.

In general, NerdWallet recommends whenever possible:

Credit cards are safer to carry than cash and are more secure against fraud than debit.

You can reap significant benefits without changing your spending habits.

It's easier to monitor your spending .

Responsible credit card use is among the easiest and fastest methods to build credit .

Utilizing credit cards . Spend your money as normal, pay the balance in full each month, and you'll reap the advantages of credit cards without carrying debt or paying any interest.

The top credit cards to be used in 2023.

Cash back and 0% APR transfers of your balance -- check out our Best-Of Awards for the year's top credit cards.

>> MORE:

Credit cards are safer to carry and use

When you loose your wallet, or are stolen, any money you were carrying will likely be gone for good. If thieves go on a shopping on your credit cards, you generally won't be held accountable for any the fraudulent purchases. It may take some time to sort out the resulting mess, but you won't lose any of your cash.

Debit cards, too, pose a risk. If your credit card gets used fraudulently and the card issuer is the one who loses the money. When your debit card has been used fraudulently, . If you notify the fraudster promptly and report the fraud, you will receive your money backeventually. It may take a while until the issue is resolved. During this time the checks could bounce, automatic payments might be denied because of insufficient funds and you may have difficult time paying the costs of your bills.

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Credit cards earn easy reward points

Credit card rewards encourage you to use your credit card, and are very persuasive indeed. With a simple flat-rate card that pays the same amount for each purchase, you could earn back 1.5 percent, or even percent of every dollar you spend, whether in cash or miles or points to use to travel or for other items. If you spend $1,000 per month and you can earn between $180 and $240 per year without any special effort.

Other cards offer greater rewards for specific areas of spending, such as groceries, gas or restaurants. Combining a few cards, and you can amplify your rewards considerably.

As an example, suppose the family has four cash back credit cards -- the , the , the and the . Utilizing them in a strategic manner, that family could earn hundreds of dollars per year from cash back

Spending

Rewards rate

Annual rewards

Groceries

$400 per month

6%

$288

Restaurants

$150 / month

*5% over three months

* 3% for nine months

$81

Gas

$100 / month

* 5 % for six months

* 3% for six months

$48

Amazon.com

$100 / month

* 5percent for six months

* 2.2% for six months

$42

Media streaming

$50 per month

6%

$36

Travel

$1,000 / year

5%

$50

Everything else

$1,000 a month

2%

$240

TOTAL

$785

Find out how the rewards are earned

Groceries

The Blue Cash Preferred(r) Card from American Express earns 6% cash back up to $6,000 per year spent at U.S. supermarkets, then 1percent (terms will apply -- check ).

Restaurants

Three months in the it(r) it(r) Cash Back earns 5% cash back on up to $1,500 per quarter in spending in categories you can activate and 1% on other purchases. In 2020, restaurants was a 5% category for one quarter.

For nine months, the Flex(sm) from Chase Flex(sm) earns 3% cash back at restaurants.

Gas

For three months: The Chase Freedom Flex(sm) earns 5 percent cash back on up to $1500 of spending in quarterly categories that you choose to activate. The year 2020 was the last time Chase included gas stations in a category with 5% during three months.

For three months: In 2020 The It(r) Cash Back program was introduced. it(r) Cash Back had gas stations as an 5% category for three months.

The card is valid for six months. The Blue Cash Preferred(r) Card of American Express earns 3% cash back at U.S. gas stations (terms apply).

Amazon.com

For six months: In the year 2020 Chase and Discover had Amazon.com as an 5% category for three months each.

For six months: The Citi(r) Double Cash Card earns cash back of 2% on all purchases . You earn 1cent when you purchase and 1% when you pay it off.

Streaming media

The Blue Cash Preferred(r) Card from American Express earns 6% cash back on select U.S streaming services (terms must be adhered to).

Travel

The Chase Freedom Flex(sm) gives you 5 percent cash back on trips that is booked through Chase.

Everything else

Make use of this Citi(r) Double Cash Card and earn 2% cashback.

An important note of warning however: Don't spend more than you normally would just to get extra rewards. A little cash back will not make up for the additional $100 at the supermarket store or that extra $250 worth of clothes. And if you carry an account balance from month month the interest you accrue will more than take the value of your rewards and you should pay it all in full whenever you can.

>> MORE:

Credit cards help you track spending

Maintaining a budget can be a challenge no matter how you spend your money. But figuring out where cash went is particularly difficult. You can lose receipts, and there's often no other record of how much you spent or where your money was spent. Checks? Don't remember to add one to your check register and you'll have to wait for the recipient to cash it before you can trace it (and some people are notorious for storing checks for months).

Credit cards are a great way to ensure that everything shows up on your account online in real time. Further some issuers automatically categorize purchases in accordance with the merchant:

Purchases made with an Chase credit card identified by categories.

The majority of major issuers let you generate reports to see how much you've invested in various categories during a given month, or for the entire year or for a time period you specify:

Spending report for an Chase credit card.

If you use a budgeting app like Mint or You Need a Budget, you can import information from your credit card and bank accounts. It's easy to put each purchase into the budget category and to identify areas where you're spending too much and where you can stand to spend a bit.

>> MORE:

Credit cards help build credit

You don't need to have a credit card to have excellent credit score, and you certainly don't have to keep the balance. However, judicious use of a credit card is the most effective way to improve your credit scores and a good credit score can open many opportunities. It makes it easy to get housing, whether a potential landlord is examining your credit score prior to granting you keys or applying for a mortgage to buy a home. Insurance agents and utility companies also could use your credit history to determine your eligibility and even your rates. It could even increase your chances of getting a job, as many employers run credit checks on applicants for jobs.

If you have a credit card, making regular small purchases making sure your balances are low and making sure you pay your bills punctually will boost your credit score in the long run.

>> MORE:

It is not advisable to make use of a credit card

You'll be required to pay an additional fee: Merchants pay processing fees every time you make use of credit card. Most of the time, those charges are included in the price of the merchant, just like other costs associated with doing business. However, sometimes, a business may transfer the cost of processing to you directly by adding an upfront fee or "convenience fee" for the use of cards with credit. In these instances it's likely that you'll need to pay with a different method, unless your rewards on credit cards are high enough that they'd cancel out the surcharge.

If you don't want to force the merchant to be charged a fee Also, you might be able to steer clear of using credit cards for smaller merchants that you would like to help. They may be happy when you pay with cash or via check, because then they don't have to pay the processing fees. Even debit cards are better than credit cards offered by merchant's perspective, since processing fees for debit cards can be lower than the fees they'd pay for a credit card transaction.

If you don't want to overspend: Some people struggle to keep their spending under control when they use a credit card. A credit card limit of five figures can make it difficult to recall the reasons you shouldn't buy that shiny object. If you're getting close to your credit limit or you're concerned about accruing an excessive credit card balance it's possible to pull out your debit card or use cash.

There are many positive benefits for consumers who use credit cards. Find out the best one for you. Just make sure you're able to make wise spending decisions, regardless of the method of payment you decide to use.

>> MORE:

To see rates and fees of the Blue Cash Preferred(r) Card from American Express , see .

The authors' bios: Virginia C. McGuire is a former credit cards editor for NerdWallet.

Paul Soucy is the lead credit cards editor for NerdWallet. He's worked for USA Today and the Des Moines Register and has an MBA.

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Find the right account for your needs.

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What are you searching for in a new credit card? Rewards and travel cash back on purchases Pay off the balance of your debt build credit

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