Debt Relief News

Last week, Democrat Senators Chuck Schumer, D-N.Y. and Claire McCaskill, D-Mo., introduced the “Debt Settlement Consumer Protection Act.” This debt relief bill would limit the fees that a debt settlement company would be able to charge a consumer for debt settlement services. If passed, the new law would mandate written disclosures before debt reduction services were performed and include a provision for the right to cancel for a full refund. 

According to a press release from the Council of Better Business Bureaus, BBBs across the nation have received more than 3,500 complaints about debt settlement companies since the beginning of the recession in 2007.  Many consumers complained that the debt settlement programs did not work.  Some people even accused the debt settlement companies of increasing their debt.  Credit card debt settlement can leave consumers liable for a lawsuit from a credit card company, in addition to having wages garnished.

A number of consumers who quit the program say they were not refunded for payments they had made.  The debt settlement bill comes after a hearing last week during which the U.S. Government Accountability Office testified about the results of a covert investigation into the debt settlement industry’s practices. It found that most companies it mystery shopped charged an upfront fee before any services were performed, and nearly all of them told the undercover callers to stop paying their creditors. In some cases, a consumer’s payments into the program would go entirely toward fees for up to four months.  Certainly debt settlement can be a successful financial tool for consumers to get out of debt, but it should be a last resort. The FTC explains the pros and cons of various debt relief options in this fact sheet, “Knee Deep in Debt.”

The Better Business Bureau warns of the following red flags for unscrupulous debt settlement companies:  High upfront fees.

• Guarantees of debt reduction by specific amounts.
• Claims that the process will be swift or easy.

The original article was written by Leslie McFadden for Bankrate.com

Last week TASC reported that the debt settlement industry was under attack as credit card companies may be misleading the government once again.  Debt settlement companies that charge high fees and mislead consumers would be more tightly regulated under new legislation introduced Wednesday.  TASC agrees that debt settlement companies need to be held accountable for their actions but much of this debt relief reform appears to be biased and many incidents are taken out of context.  The proposed law, put forward by Sens. Charles E. Schumer, D-N.Y., and Claire McCaskill, D-Mo., comes as complaints about the debt settlement industry have soared amid the economic downturn.

Under the legislation, debt settlement companies wouldn’t be able to collect fees until a settlement was reached. Consumers also would get clearer upfront disclosures, including a detailed list of all costs and promised services.  Typically, the settlement firms promise to negotiate with credit card companies to reduce the amount that consumers owe. Costs vary, but a company might charge up to 20% of the total debt. Fees are usually demanded upfront, even though a settlement may never be secured

Hiring a debt settlement company doesn’t stop the collection calls either. Interest and financing charges continue racking up too, and lenders may even decide to sue in the meantime.  Consumer groups note that individuals can negotiate directly with lenders, and that credit card companies often refuse to negotiate with debt settlement companies. Even if a debt negotiation is reached — either independently or through a third party it could hinder the consumer’s credit score. (so do bankruptcy, consumer credit counseling and debt management)  Under the Schumer-McCaskill bill, consumers would have the right to cancel a debt settlement agreement and get a full refund. The legislation would provide for enforcement through state attorneys general and the Federal Trade Commission. The federal agency also would be given authority to regulate the industry’s advertising and marketing practices.

Like take a loan out to consolidate debt, debt settlement is not something you want to just jump into.  Consider your debt relief solutions and tax implications before signing an agreement with a debt settlement company. 

1. First, determine how much debt you have(specifically unsecured debt no including student loans) Request a copy of your credit report from one of the main credit reporting agencies. You could view your credit report with a credit repository company like Trans Union, Experian or Equifax.

2. Have you spoken to a debt settlement company about qualifying?  In most cases, debt settlement companies only work with people who owe more than $7,500. There may be other requirements as well. Read through the information provided by the debt settlement company. Make sure you meet all the requirements.

3. Determine if you have the money for debt settlement. Subtract from your monthly income your normal living expenses, including housing, transportation, utilities, food, and insurance. If you have money left over, then debt settlement may be right for you. If you don’t, you should not try credit card debt settlement.

4. Search for a debt settlement company. Don’t sign with the first company you find. Instead, read through what services they provide and what they expect from you. Look for debt relief companies that have been in business for a while. Make sure the debt settlement companies you are working with have been approved by the Better Business Bureau.

5. Decide if debt settlement is the best option for you. With debt settlement, you can reduce the total amount you owe and improve the relationship between you and your creditors. Also, you can pay your debt quicker as long as you remain faithful to the credit card settlement offer.

Debt settlement can also incur potential tax problems, and may hurt your credit rating. It may encourage your creditors to initiate law suits against you. Also, it could increase the frequency of calls to you by your creditors.  Read more at http://www.ehow.com/how_2002294_compare-consolidation-settlement.html

The California debt relief company, Debt Settlement Nationwide announced a new debt relief initiative to help consumers find the path to debt freedom.  With so many consumers getting behind on credit card bills,  a better solution for debt relief is in demand.  Debt Settlement Nationwide  announced that their debt reduction option to help people get back on their feet their financially.  With bankruptcy laws and lending tightening considerably, consumers look to debt settlement to take the pressure off of the high rate burdens that go hand in hand with unsecured debt.  See the original blog post online > New Debt Relief Programs

Bankruptcy and debt settlement have become two popular debt relief choices for consumers seeking help, so many finance companies are searching for debt leads online.    Now that home values have been devastated, homeowners no longer have the ability to take out a no equity debt consolidation loan.

Debt settlement has become the preferred solution for consumers that want to eliminate their credit card debt.  Debt settlement leads are in high demand because millions of people are looking for debt relief  online.   The Mortgage Lead Vault has many popular lead buying programs to for companies seeking mortgage, foreclosure prevention and debt relief leads.   Read the original article online > Debt Leads Rise in Popularity.

One of the most effective steps in credit restoration is debt consolidation.  Debt consolidation loans were very popular with homeowners until the credit crunch of 2008.  Millions of consumers who were burdened by credit card debt we now seeking alternative solutions to eliminate their credit card debt. Almost every day sees a new posting somewhere about debt consolidation, its benefits.

As many people have experienced personally, credit repair can be time-consuming and paying a credit repair company for their services can be costly. So if you’re already behind, trusted credit repair companies will most likely suggest you look into debt relief if debt consolidation loans are not a viable option. Due to the challenging landscape of credit repair, it is critical for your finances to be stable and monthly bills to be paid on time to prevent further damage.

Does debt settlement affect your credit negatively?Â
Yes, quite often debt settlement will make your credit scores drop, at least during the months you are building your account for the debt negotiations.  However, consumer credit counseling, bankruptcy and most debt management programs will also damage your credit, but in most cases, consumers can get their credit to rebound quickly after debt settlement.  It is amazing what credit repair can do to rebuild your credit profile.

As soon as you have the ability, I recommend starting a savings plan. Saving even a little bit each pay-period enables you to stop using your credit cards for the unexpected expenses that can arise frequently. Saving is essential to grow your wealth and prevent consumer debt. Check with your bank to set up an automatic transfer to savings via payroll deduction or direct deposit.

Read the complete article > Debt Settlement Solution or Scam? The debt relief article was written by Jeff Morris from the US Debt Relief Firm.

The debt relief industry continues to expand with debt settlement, debt management, consumer credit counseling and bankruptcy filings rapidly soaring.  The Debt Relief Business and specifically, the attorney based debt resolution model is considered the new and preferred way of helping consumers settle their credit card debt.  Early on, we’re talking maybe a year and a half ago most sales offices believed that their dreams had been answered after the subprime mortgage meltdown, as promoting loan modification was the easiest money they’d ever seen.  Alongside modifying home loan modifications, loan officers, credit repair affiliates, mortgage brokerages and accountants alike became debt settlement affiliates with multiple net branches, but limited to green states.

Today, and with even greater confidence, the loan modification professionals see the debt relief business as the way to go and are quickly moving to promoting debt settlement, synonymous with debt resolution except debt resolution is performed by attorneys.  Attorney Based Debt Resolution also has several advantages to the debt settlement processing model, including the ability to service consumers in 48 states.

Debt consolidation used to be easy for homeowners.  They could run up credit card debt and then just take out a home equity loans to consolidate their credit card debt and even get a tax deduction in the process. Millions of homeowners lost their home equity so debt consolidation options have vanished.  Debt settlement has become a more popular method of debt relief, mostly because everyone qualifies for debt settlement.  Consider carefully your options to eliminate credit card debt quickly and effectively. 

Debt relief offers many benefits many consumers strapped with credit card debt.  Debt negotiation may not be for everyone, some people are better suited for bankruptcy and others do not have the correct mindset to go through this process.  The goal of a debt settlement is to obtain a debt settlement for you on the current debt amount you owe your creditor. So for example you may owe one particular creditor $10,000 so the goal of the negotiator would be to have you end up paying back say $6,000. The two main benefits of debt settlement are to save money on what you currently owe your creditors and to save time. By just paying the minimum payment with even a modest interest rate you will be looking at 30 or more years to become debt free, with a sound debt negotiation program you will be out of debt within 2-3 years or sooner depending on your current financial situation.

Even though there are great benefits but there are a few drawbacks with debt settlement because your credit can suffer. For starters your creditors will not be willing to negotiate a debt settlement at all if you are current with your monthly minimum payments. They would prefer you to stay on their credit treadmill for the next thirty years and pay them back over four times the balance in interest alone. So you must be late on your payments to put the creditors into a position where they will be willing to settle. Once you stop paying them the ball game changes completely and they will then be willing to talk in terms of negotiating a settlement.

Debt settlement and the debt negotiation industry has grown significantly in this weak economy.  The available credit has all but dried up for American consumers seeking unsecured credit lines yet the interest on their credit card debt continues to rise. 

With incomes decreasing nationally and the unemployment teetering at 10%, many consumers no longer have the ability to pay back their unsecured creditors that hold their credit card accounts.  Most of these people are delinquent on their credit card bills and very few qualify for a traditional debt consolidation loan, because if they own a home, they likely lost their equity during the housing crisis. 

Consumers are considering bankruptcy, credit counseling and debt settlement that negotiate reduced credit card balances if funds are offered to pay off the credit card debt.  More and more people are comfortable with the debt settlement, because it allows them to become debt free in 12- 18 months.  Credit can be reestablished quicker after debt settlement than a bankruptcy, because the chapter 7 and 13 bankruptcies are reported by Trans Union, EquiFax and Experian for seven to ten years.

In an effort to curb fraud and eliminate scams, State and Federal regulators are moving swiftly to reform the mortgage, debt relief and loan modification industries.  As the Mortgage Reform and Anti-Predatory Lending Act continue to make their way through Congress, it is clear this potential mortgage lending and settlement legislation could be just the beginning of an onslaught of future regulatory reform lawmakers will use to help protect consumers even more aggressively. The bill would fundamentally change the home lending market, placing tighter restrictions on nonprime mortgage lending. Perhaps more importantly, it would require mortgage lenders to establish what the bill calls a “duty of care� in proving borrowers could repay a loan and that mortgage refinancing gave them a net tangible benefit.

At the same time, banking and mortgage industry regulators are feeling much more empowered under the Obama administration than they were during the previous one. More stringent regulatory exams, a rising number of enforcement actions and the growing number of financial institution closings during the first quarter of this year are evidence of this fact.

These new rules are very different from those of previous years that required a simple update to a loan document or disclosure. Instead, these changes will demand mortgage lenders change the way they do business, revising and improving operational and compliance risk management processes entirely.  The myriad of federal and state anti-predatory lending laws are one subset of consumer-focused regulatory requirements lenders must comply with, but they present some of the most confusing and complex compliance changes facing mortgage relief companies and lenders.