New Regulations For Debt Settlement Firms From The Ftc
Any advertisement that claims they can settle your debt for a fraction of what you owe sounds too good to be true
. And in reality, it usually is. Debt settlement agencies have taken off since the beginning of the recession and continue to target unsuspecting people.
So, recently, the Federal Trade Commission wrote new rules to govern the debt settlement industryto crack down on false advertising, expensive up-front fees, and misleading payment plans. The new rules, in general, are as follows:
1. No more upfront fees. These companies tend to make their money by charging a large initial fee. There was nothing, before these rules, to prevent debt settlement agencies from collecting a fee and not doing much else. When the new rules go into effect, the companies will now be required to reduce, renegotiate, or settle at least some of your debt before you have to pay them. In addition, they must have a written agreement about the nature of the fees.
2. Transparency. Debt settlement agencies must now disclose to potential customers information before they sign up. Debt settlement agencies are now required to tell clients a time-frame of the settlement strategy and the fact that there could be negative consequences such as damage to your credit history.)
3. No more false advertising. A debt settlement company is no longer allowed to claim to be a nonprofit when it is not. They also are not able to give false success stories or other forms of misrepresentation.
4. Your own bank account. Instead of paying your settlement payments into a veiled bank account created and managed by the debt settlement agency, now debt settlement accounts must be made at an FDIC insured bank and the account must be in the name of and controlled by the client.
Where does that leave the debt settlement industry?
I'd bet that it won't be around much longer. For the most part, debt settlement agencies are flawed in theory and certainly in practice. The new regulations are going to help put the scams out of business and expose the agencies left to the general public, showing them how much damage debt settlement can actually do to your financial future.
So many are taken advantage of by the deceit of debt settlement agencies' misleading advertising. Contrary to what they claim, debt settlement can still hurt your credit score. And, to make matters worse, they can't provide you any legal protection or eliminate debts, like bankruptcy can.
Many people consider debt settlement as an option because they are over their heads in debt from credit cards, or because of expensive medical bills, loss of a job, or reduction in paybut, for most of these hard working people, bankruptcy is a better option. You should speak with a bankruptcy attorney to determine how a bankruptcy may be able to get you credit card debt help or protection from foreclosure. And always keep yourself educated by seeking out free information from experienced and qualified attorneys to avoid scams and get the help you need to secure your financial future.
by: Jim Brown
Find A Solution For Bad Debt - Consolidate Today Debt Settlement Solutions - Debt Negotiating Advice For Consumers Making A Debt Settlement Deal - Customizing A Debt Settlement Program For You Making A Debt Settlement Deal - Do I Qualify For Debt Settlement? How Do I Manage Debt to Get it Under Control Curing Debt In 5 Simple Steps I Will Transfer Billion Subordinated Debt Issued Jimmy Choo Was Purchased By Towerbrook Capital Partners The ABC's of Getting Out of Debt: A Review Purchase Acai Berry Dietary supplements - Factors You Ought to Know Just before Ordering Acai Berry Supplements Everything You Wanted To Know About Purchase Order Factoring And Inventory Finance In Canada ! How To Eliminate Unsecured debt - Get Rid Of Unsecured Debts For Good Making Your First Purchase Of Jewelry Www.jewelrychinawholesale.com