FTC‘s Regulation for Debt Settlement Companies: What's next for Debt Settlement Companies?

FTCs Regulation for Debt Settlement Companies: What's next for Debt Settlement Companies

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FTC's new debt settlement rules take effect Oct. 27, 2010, and cover telemarketing by for-profit debt settlement services, credit counseling services and debt negotiation companies as well as companies falsely claiming to have nonprofit status. A for-profit company selling its services via the telephone may not charge customers fees until it "successfully renegotiates settles, reduces or otherwise changes the terms of at least one of the consumer's debts." However, the new rules do not apply to in-person or Internet-only sales.

For the full FTC TSR Final Rule please click here

TASC and Industry Response: "Debt settlers will go out of business"

David Leuthold, executive director of The Association of Settlement Companies (TASC), said the ruling will likely mean many of the debt settlement companies will stop providing services.

"We're disappointed that the FTC came out with this ruling, especially with regards to the advance fee ban," Leuthold said in a telephone interview. "It's just a fact that companies need revenue coming in prior to the actual settlement being made."

He said creditors normally "won't agree to a settlement unless that money can be paid" all at once or within a short period following the negotiation. "Most of our clients don't have any money saved up."

Waiting to charge fees until there is a settlement will create "a big financial burden to a lot of debt settlement companies. They just aren't going to be able remain in the business to help anyone."

"Now, there are going to be very, very few companies that are going to be able to service clients," he added. Leuthold estimated that there are about 1,000 companies currently offering debt settlement services in the United States.

TASC Response: "This is a tragedy and a disaster for consumers"

"This is a tragedy and a disaster for consumers," John Ansbach, USOBA's Legislative Director, said. "It's unfortunate that the Commission chose to ignore the hundreds of consumers who filed comments in support of debt relief providers and instead, with this Rule, handed a victory to those who would harass and even imprison consumers through aggressive debt collection prosecution."

What's next for Debt Settlement Companies?

Tax is a proactive, forward thinking business move. Every consumer that did a or is currently enrolled in a Debt Settlement program and or even in some sort of Loan Modification or Short Sale within the past few years has tax liabilities because lenders and banks have sent and are sending the IRS all of the consumers 1099's; And Uncle Sam is going after those taxes thatconsumers owe from debts waived from the Loan Modifications and or Short Sales and even Debt Settlement programs. Consumers are forced to deal with this, the IRS is a relentless creditor, much more severe than any other out there: wage garnishments, bank levies, heavy penalties and interest and in some cases imprisonment.

The Debt Alternative Center anticipated this day coming and is committed to making sure we offer our affiliates a viable profitable option.Tax Resolution is the solution to stay strong and profitable in our changing industry. Diversify your products by moving a significant percent of your Debt Settlement marketing budget over to Tax. Strike while the IRON is hot. If you invest just two to three months of your Debt Settlement residuals (or marketing budget) to fund Tax leads and follow the sales and operational trainings we provide you, your company can recover your investment within 60 days because Tax compensation is paid out in full in 60 days, if not before. Then all Debt Settlement residuals after 60 days will be pure profit. For more, information visit www.debtalternativecenter.com or call 877-282-0555.

FTCs Regulation for Debt Settlement Companies: What's next for Debt Settlement Companies?

By: Bryant

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