Starting in October 2010, new rules will start for debt relief consolidation companies and how they charge for their services. You can read about the FTC ruling that has just been put up on their website.
The government is forever trying to protect us from unscrupulous marketers and apparently they think debt consolidators fall into that category. Debt relief companies will no longer be allowed to charge fees before they perform their services. It seems debt relief is a grey area where companies make big promises of eliminating your debt or at least a big portion of it and then charge an up front fee for the service. According to the FTC, the promises are often not kept and the end result of their “service” is much different than what was originally promised. With the up front fee though, they already have their money and of course the person who paid the fee is then in a bigger financial hole than they were to begin with.
Under the new ruling, debt relief providers cannot charge a customer anything until a successful negotiation has taken place involving the settlement or reduction of the customers debt. Simply put, if the debt relief company is successful in helping a client reduce their debt, only then can they charge for their service. There will have to be lots of new written agreements in place so that the fee can be charged after completion of the debt reduction service.
So many people are in credit card debt right now and this bad unemployment isn’t helping any. The economy looks to be in a funk for many months ahead as no end is in site. This is causing more people than ever to search for debt relief grants and any other type of debt relief they can find. They hope to get Obama debt relief or some other kind of handout, giveaway, or help from the government but there isn’t anything like that. At least now, starting in a couple of months, they won’t have to worry about being fooled into paying for debt help from a company that might not be able to deliver on it’s promises.