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Choosing A Debt Settlement Company
Have you heard about the new FTC rules regarding Debt Settlement? Learn how to protect yourself by asking these few questions when deciding which Debt Settlement company to choose. This valuable information can save you thousands of dollars and make the difference between getting out of debt or having to file for bankruptcy.
We’ve all seen the commercials on TV or heard them on the radio….get out of debt for 40% of what you owe, eliminate your debt for pennies, and stop collection calls. Some even go so far as to make us think there actually is a government bailout program designed to assist them. Flat out lies! There is no bail out program but the government is finally helping in a different way by going after deceptive debt settlement companies. The Federal Trade Commission recently passed new laws prohibiting debt settlement companies from charging any upfront fees. What consumers failed to realize about these upfront fee based companies is that for the first few months all or most of what you are accumulating towards what you think is going to be a future settlement is being applied to company fees. The problem is that 6 months after defaulting on their credit cards the lawsuits start coming. So you call your debt settlement company to let them know you just received a summons only to be told that you have nothing or very little accumulated. Now what? Well, now you have to either come up with more money to settle the lawsuit or enter a payment plan for the full balance. This is why the dropout rate for the industry was so high, not because debt settlement didn’t work but because the up-front fee based model doesn’t work. Believe it or not, there are a handful of ethical debt settlement companies out there that are success based and do not charge fees until they actually settle your debt, but more about that later. The good news is that these new rules have dramatically slowed down the deceptive companies and marketers out there; but take warning that consumers are not out of the woods just yet. In an attempt to circumvent these new laws many debt settlement companies are partnering up with lawyers and hiding behind an attorney exemption. The public is now being introduced to the new “Attorney Model” so now instead of paying 15% of your debt upfront; you are paying a retainer fee of 15% of your debt and are led to believe that you are hiring an attorney. Read the fine print! Most of these attorney based firms do not actually represent you in court and if they do it with extreme restrictions and the scope of work is limited.
On November 13, 2010 a meeting to restore truth in the Debt Settlement industry was held in Raleigh, NC and Allison Brown Esq, attorney for the FTC attended this meeting http://getoutofdebt.org/23618/the-rally-in-raleigh-november-2010-aftermath and made it clear that there is attorneys are not exempt from the FTC rules. Despite these warning attorneys and debt settlement companies alike seem to be completely disregarding the laws and continuing to charge fees upfront. http://getoutofdebt.org/23686/attorney-model-debt-settlement-companies-affiliates-and-marketers-are-not-going-to-like-whats-coming-from-the-ftc
Here are a few questions to ask that will help you quickly see what kind of company you are dealing with.
- Are you a Debt Settlement Company or an Attorney Model?
- If Attorney Model - Can I speak with the Attorney in my State?
- Where will my funds be held?
- How do you earn your fees?
- When do you collect your fees?
- What will happen if I get sued?
- What will happen to my credit?
- How long have you been in business?
Debt Settlement, when performed ethically and properly is a very effective tool to help consumers get out of debt and help avoid bankruptcy. Doing your research and asking important questions will make the difference between helping and harming yourself and although the majority of the players do not operate ethically there are a few companies who have never charged upfront fees. For a free consultation or second opinion feel free to call our office and speak with a member of our staff that will listen to your situation, understand your objectives and ultimately offer the best solutions to help you get back on your feet. www.active-debt.com – 866-720-7483
