Posted on October - 17 - 2010
Consumer debt legislation falls short
The final phase of federal legislation offering protection todebt-swamped consumers became effective October 27, but may not be stringent enough to fully protect consumers from debt settlement and debt consolidation scams. Although for-profit debt settlement /debt consolidation companies are required to disclose cost, potential negative consequences to concumers (for example, negative credit reporting of past due accounts) and how long a proposed debt settlement or debt consolidation plan will take to complete.
Financial guru Michelle Singletary points out in her blog, The Color of Money, that debt consolidation, debt settlement, and consumer credit counseling services will no longer be allowed to collect fees up front, but they are allowed to keep any fees collected regardless of whether consumers complete their debt reduction plans. Additional provisions of the legislation include:
Debt settlement companies selling services over the phone cannot receive payment for their services unless and until the debt is settled.
Funds set aside for settling debt must be deposited into a dedicated account owned by the consumer, who is free to withdraw funds at any time.
Finding Debt Help: Looking out for yourself, and your finances
- Don’t accept unsolicited offers of help: Legitimate firms offering credit counseling and other debt settlement services typically do not solicit consumers via phone calls or over the internet. Avoid unsolicited offers of help from firms or individuals unfamiliar to you.
- Sounds to good to be true? There are no miracles: Although it’s possible for credit counselors and other debt relief providers to negotiate lower interest rates and to obtain waivers of late fees in some cases, few credit card companies agree to settle credit card debt for less than owed. There are also no legitimate means of “erasing” bad credit. Credit counseling and debt settlement may help with avoiding bankruptcy, but partial and late payments made during your debt settlement or credit counseling plan are reported to credit bureaus.
- Get referrals and check company references: Consumer credit counseling and debt consolidation services, as well as debt settlement firms, should be able to provide references. It’s a good idea to check with the Better Business Bureau for complaints against companies you’re considering for debt help. If you know anyone who has completed a debt consolidation or debt settlement program, ask for a referral. In today’s economy, many people have fallen on hard times; it’s likely that someone close to you may have a lead to the help you need.
Your instincts and common sense can serve you well when considering debt relief options; Ask questions, take notes, and don’t give into pressure when interviewing debt help providers. It’s a good idea to consider multiple options and find a good fit for yourself and your circumstances.
Similar Posts:
- Save thousands of dollars with a debt settlement
- Credit Counseling and Debt Consolidation: Finding Help on Your Credit Card Bills
- Debt reduction takes hard work and some sacrifices
- Debt consolidation and credit counseling services: How they can (and can’t) help
- Should you consider debt settlement to save money?
