Debt reduction and debt consolidation cons still uncontrolled post-recession

You can hardly start up the Television or radio anymore without seeing some sort of advert for a debt relief or debt consolidation business. Though many of these companies are perfectly ethical and do what they promise, there are a lot of them that are frauds. There are still plenty of debt reduction companies that are actively trying to stay away from complying with the regulation.

Federal Trade Commission regulations disregarded

To be able to stop fake debt settlement and debt settlement businesses from stealing, the Federal Trade Commission started up many new rules. This was over half a year ago. Debt servicing companies, according to KNDU, an NBC affiliate in Washington state, are prohibited from asking for an advance fee, have to make specific information accessible up front and can’t misrepresent themselves in any way. Exactly how much money a person can save and what the fees are in the service have to be explained upfront. There are still some businesses not following this law. This can be a problem.

Settlement for large company made

WalletPop states the states of Washington and New York did a sting with Freedom Debt Relief and found out it didn’t follow debt services’ laws. Customers in those states were misled by the California firm. In both cases, the company settled. It settled for $2 million in payments in consumers. The company is dealing with a class action lawsuit right now. It also made similar settlements with four other states. The Federal Trade Commission, according to the Wall Street Journal, recently won large settlements against two debt management businesses illegally “robocalling” consumers with automated phone messages. Advanced Management Services NW and Dynamic Financial Group were found to have robocalled consumers and told those who responded they could reduce debt for a hefty upfront fee. If it didn’t work, Advanced Management Services said it would refund money although the companies both would keep the cash and tell customers that they need to p! ay their bills on time to cut back debt.

Too great to be true

With debt settlement corporations, “if it looks too good to be true, it most likely is” works really well. The Federal Deposit Insurance Business and Federal Trade Commission both warn that any company guaranteeing to remove negative items from credit states or a settlement for “pennies on the dollar” is most likely a scam. Until after there is many kind of debt reduction, debt settlement corporations aren’t legally allowed to ask for any money. Just go ahead and check for a nonprofit debt counselor instead. There are many of them that can help you do a debt reduction plan for free. Before going to any for-profit debt reduction services, try a not-for-profit credit counselor first, the CFIC suggests. Discover financial advisers by going to the National Foundation for credit Counseling.

Citations

Walletpop

walletpop.com/2011/03/08/freedom-debt-relief-agrees-to-pay-back-consumers-after-accusatio/

KNDUO/p>

kndo.com/story/14696586/how-new-federal-debt-relief-rules-protect-consumers

Wall Street Journal

online.wsj.com/article/BT-CO-20110526-711657.html

FDIC

fdic.gov/consumers/consumer/news/cnfall10/debtoverload.html

FTC

ftc.gov/bcp/edu/microsites/moneymatters/dealing-with-debt-relief-services.shtml

NFCC

nfcc.org/