It was announced recently that the FTC will begin imposing new restrictions on the Debt Settlement practice due to widespread abuse against consumers who were struggling during our recent economic downturn.
A fee may only be charged to a consumer once their debt has been settled, reduced or renegotiated, rather than being charged up front before any services had been provided or verified. This will go into effect beginning October 27th.
Full disclosure such as any negative consequences, how much it will cost and how long it will take to repay, must be made on the settlement companies part before an agreement is entered on part by the consumer. This is due to the settlement process typically resulting in mounting late fees, over limit fees and interest rates due to the accounts not being paid.
Another rule will be to disallow debt settlement companies from requiring customers to set aside money in a separate savings account managed by the settlement agency. If an account is required it will need to be opened by the customer at a separate banking institution.
Remember, Debt Reduction Services is NOT a debt settlement agency. Debt Reduction Services is a nonprofit Consumer Credit Counseling organization that places emphasis on education and assisting consumers to repay their debt in full in a manageable fashion.
Source – Associated Press (View Full Story Here)
As always, if you have any questions, would like to discuss your financial challenges, or are just looking for advice, please call us at your convenience. As always, we are here to help and look forward to hearing from you.