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FTC Adopts New Rules For Predatory Debt Settlement Agencies
Author : Jim Brown
You have probably seen those commercials for debt settlement agencies promising to renegotiate your debt for pennies on the dollar. But, as many have pointed out--these advertisements are often misleading and sometimes plain false.
Therefore, in the past week, the FTC drafted regulations for the debt settlement industryin order to stop misleading advertising, huge initial fees, and no performance guarantee. 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. Until the new regulations were passed, nothing stopped debt settlement firms from simply taking your upfront fee and doing nothing to help you. As soon as the regulations take effect, debt settlement agencies will be required to get you at least some form of reduction on at least one of your debts. Furthermore, debt settlement agencies are required to have their fee structure in writing.
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. Debt settlement agencies are not able to falsely state that they are not-for-profit anymore. 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.
What does all this mean for the debt settlement industry?
I don't think debt settlement agencies will continue to be in business. According to experts, debt settlement companies fail in theory and in practice to accomplish the needs of their customer. 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. What is worst of all in this scheme is that debt settlement firms aren't really able to offer you total protection from your creditors.
A lot of people think that the huge claims of the debt settlement firms are true when they are over their heads in debthowever, for most hard working people who have found themselves in too much debt, bankruptcy provides better options. A bankruptcy attorney is probably your best bet if you are thinking that a bankruptcy is the best option for protection from foreclosure or help with credit card debt. 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.
Author's Resource Box
Jim Brown is a bankruptcy attorney based in St. Louis, Missouri. He has spent 15 years fighting an industry that consistently takes advantage of hard-working Americans.He started his rim, Castle Law Office, with his wife and best friend, Sherrie. In his spare time, he enjoys coaching youth hockey, golfing, and spending time with his three wonderful children.For more information, visit http://www.castlelaw.net
Article Source:
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Tags: bankruptcy, chapter 7 bankruptcy, chapter 13 bankruptcy, debt settlement agency, debt settlement, bankruptcy attoreny
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Submitted : 2010-09-01 Word Count : 1 Popularity: 47 Times Viewed: 12
