subject: Debt Settlement Protection Act - Your Debt Doesn't Settle, You Don't Pay [print this page] Debt Settlement Protection Act - Your Debt Doesn't Settle, You Don't Pay
If you think that you will not be able to find a legitimate debt relief firm and you will get cheated, there is a reason to think so. The sudden boost in the demand for debt settlement led to the growth of some shady firms in the industry which started cheating the consumers. These firms came up with fake but truly attractive promises which helped them to attract the consumers. They said to the consumers that the debts will be eliminated easily and that the consumers will get out of financial troubles in months time. This was enough to fool the consumers. The consumers trusted them and when these firms asked for service fee in advance claiming that the money will be required for the expenditures involved in the negotiation process, the consumers paid without a question.
Once these firms received the money, they never even tried to negotiate with the creditors because they never had any such intention to do so. After a few months passed by, they called up the consumers and said, "Sir/Madam, we tried hard to negotiate but the creditors are not ready to go for settlement. They want their money back in full and there is nothing more we can do from our end to help you. We are sorry for not being able to help you." The consumers were left with no other choice but to come out as losers. The FTC saw this and saw that this was affecting the legit firms and therefore came up with new law which blocked the collection of up front fee collection.
The law made it mandatory for the firms to first wipe out debt using settlement negotiation and then ask for fee. This forced the fraud firms to leave the market. The consumers now have the right to report to the FTC in case any firm asks for up front fee. So, if your debt is not settled, you do not pay!
Debt settlement can make financial sense for consumers and small businesses that are experiencing a financial hardship and have at least $10k in unsecured debt. It is not the only option however.
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