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May 10, 2010

Tighter Rules Coming for Debt Settlement Companies

Author: admin - Categories: Credit Card Debt Articles, Debt Settlement News, credit counseling, debt relief - Tags: ,

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.

March 9, 2009

Better Business Bureau Talks Bill Consolidation, Debt Negotiation and Debt Elimination Programs

Author: admin - Categories: Consumer Debt News, Published Debt Relief Articles - Tags: , ,

Consumers continue to get hammered by debt settlement and loan modification offers from lending companies to help get them out of debt.  When times are tough, these financial offers look appealing, but are they really the best for you?

Consider offers of debt negotiation, debt settlement, and debt elimination are three different options available to most consumers. The Better Business Bureau advises consumers to ensure they understand these critical differences before enlisting the help of a company to manage their debt or they could end up making their current financial situation worse.

The unemployment rate in the United States rose from 7.2 to 7.6 % in January according to the U.S. Department of Labor and more families are struggling to make ends meet. While the unemployment rate continues to rise, so do complaints filed with BBB against companies that claim to help consumers manage their debt. In fact complaints against debt consolidation and negotiation companies rose by almost 19 % in 2008 over the previous year.

“Consumers are bombarded every day with ads and e-mails offering services to manage or reduce debt and it’s hard to know which offer will work for them, let alone if the company can be trusted,” said Kathy Barrett, President. “Families in debt may think their situation can’t get any worse, but trusting the services of some debt negotiation, consolidation or elimination firms can actually lead to increased debt and bigger headaches.” Article was submitted by Tammy Dankovich.