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For Immediate Release

 

Federal Trade Commission Proposes New Debt Relief Regulation

Common practices under fire from Consumer Federation, numerous consumer complaints, and the FTC

 

Phoenix, AZ  August 3, 2009 – The Federal Trade Commission is looking into legislation that would change the debt settlement industry’s common practice of charging upfront and numerous processing fees.  Many companies, like The Debt Settlement Program, already offer programs that charge no upfront fees, taking consumer concerns into their own hands.

The proposed regulations would require debt negotiation companies to be completely transparent, sharing with clients the estimated time it would take to reach a settlement, the effects on their credit score, and the fact that a settlement might never be reached. The debt negotiation company would also have to make clients aware of the fact that creditors will still call and will still harass the consumer.

The proposed regulations would also prohibit debt negotiation companies from charging any fees before services have been performed, and would not allow them to make unreasonable debt settlement estimates just to obtain clients.

These seem like realistic guidelines for any respectable and reliable debt negotiation company to follow, and a few of them currently are already adhering to similar guidelines, but many in the industry foresee serious challenges.

”Our goal is to try to get people out of debt, but in a sense this would make us a creditor as well,” said Wesley Young, the legislative director for The Association of Settlement Companies, a trade group for the industry. He noted debt settlement can take two or three years, leaving companies providing lengthy services without taking in any revenue, and possibly then being left holding a bill if the consumer doesn’t pay.

A case involving numerous creditors and substantial debt could require numerous phone calls for settlements to be arranged, Young said. ”We think this will hurt the service we provide to the consumer and they’ll be less successful in the programs.”

The new debt negotiation regulations were initially spurred by the amount of complaints filed against companies charging upfront fees for services not yet complete. According to the Consumer Federation, who did the most recent study on consumer complaints, upfront fees were the greatest debt settlement complaint.

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For more information visit http://www.thedebtsettlementprogram.com or call 1-877-386-3603.