Are you tired of hearing those debt relief commercials that sound ‘too good to be true’? They tout irresistible offers to wipe away your debt fast and easy. In some cases, they even proclaim the government will pay your debt with bailout money. Sadly, many of these debt settlement companies leave customers with empty promises (no debt relief!) and in some cases worse off than before. As a result, the Federal Trade Commission (FTC) receives thousands of complaints and is now doing something to help protect consumers.
Starting today (September 27th) there’s good news for debt settlement consumers because new FTC rules go in effect. According to the FTC, the new rules:
- require debt relief companies to make specific disclosures to consumers;
- prohibit them from making misrepresentations; an
- extend the Telemarketing Sales Rule to cover calls consumers make to these firms in response to debt relief advertising.
Click here to read more details about the new FTC rules for debt relief companies on FTC.gov.
What this means?
Debt settlement companies are required to give customers more disclosure about the process and results when communicating over the phone. For example, they must disclose to you:
- how long it will take to get out of debt
- how much you will need to settle the debt
- the negative consequences of going through their debt settlement process (e.g. impact to credit rating, lawsuits)
Still to come…On October 27, 2010, for-profit debt relief companies that sell their services over the telephone may not collect their fees upfront (No more advance fees!). They must settle, reduce or renegotiate at least one debt before collecting any fee. In other words, they need to do some work before you pay them anything.
My Take on Debt Settlement:
Personally, I have no experience working with any debt settlement company, but I find the common debt settlement industry practices of preying on people who need help the most — deplorable. Especially when they make outlandish claims, collect hundreds and thousands of dollars in fees upfront, propose you don’t pay your bills and ruin your credit score.
The new rules are a good thing, because they provide consumers with more insight into the costs and process.
As for the services – If you want to settle your debt, you can do it on your own and save money on the fees for this service. Take control of your money yourself. Besides, who cares more about your money than YOU?
Need help? Then consider all of the available options (e.g. credit counseling, financial coaching) to help you get out of debt. The secret recipe for success starts and ends with YOU. When you focus on building the knowledge, taking the necessary steps and working towards your goals – you’re bound for success.
Watch the Today show video for more tips on debt settlement:
Are debt settlement companies a ripoff? Do you have any tips for getting out of debt?