What Debt Settlement Providers Must Disclose To You By Law
by Melvin Singleterry (Associated Attorneys)The most important thing for a consumer to consider when looking for a reliable and honest debt settlement company or person is whether they are willing to disclose any information you ask about the company and their methods of doing business as well as what the cost may be. One way of insuring you have a reliable company is by checking their status with the Better Business Bureau.
If you find the debt settlement company has had problems in the past, move on to someone else as the decision you make may be one of the most important decisions in your financial future. When interviewing different debt settlement companies, you must make sure they are willing to disclose whatever information you ask without problem and without beating around the bush. Some of the questions you need to ask in order to make sure they know what they are doing include; do they understand the positives and negatives settling your debts may have and what, if any, “dedicated accounts” they require.
Effective on October 10, 2010 the Federal Trade Commission in regards to its Sales Marketing Sales Rule, issued a list of prohibitions regarding misrepresentations some debt settlement companies may make and also requires them to make certain disclosures. Under the 2010 rule, debt settlement companies must disclose, when asked by a consumer, how much their service will cost, how long the process will take before seeing results, what negative consequences could result from using a debt settlement company and what, if any, “dedicated accounts” they require. Other disclosures a debt settlement company should be willing to supply include, how the process may affect the consumer’s credit rating, possible tax consequences, how much money the consumer must save before offers are made to their creditors and how long before the provider will make offers to the creditors.
The Federal Trade Commission’s, Facts for Consumers page gives a list of warning signs every consumer should be aware of before hiring a debt settlement company including:
• charges any fees before it settles your debts
• touts a “new government program” to bail out personal credit card debt
• guarantees it can make your unsecured debt go away
• tells you to stop communicating with your creditors
• tells you it can stop all debt collection calls and lawsuits
• guarantees that your unsecured debts can be paid off for just pennies on the dollar won’t send you free information about the services it provides without requiring you to provide personal financial information, such as credit card numbers, and balances
• tries to enroll you in a debt relief program without spending time reviewing your financial situation
• offers to enroll you in a Debt Management Program (DMP) without teaching you budgeting and money management skills
• demands that you make payments into a DMP before your creditors have accepted you into the program
