When you are faced with major debt problems, you may be interested in hiring a debt relief company to help you get rid of some of the burden. In this situation, many consumers elect to hire debt settlement companies to help them out. Due to some controversy in recent years, the Federal Trade Commission has enacted some new rules regarding how these companies can operate. If you are thinking about getting involved with one, it is important to make sure that you understand the FTC rules.
Rules About Fees
These debt solutions companies charge a fee for their services. According to the new rules of the FTC, you cannot be charged any upfront fees by these companies. If a company tries to sell you their debt relief services, you can’t be expected to pay anything up front. This is due to the large number of complaints that the FTC has received about some companies operating as scams.
They asked for big lump sum payments on the front end and then didn’t provide any services.
In addition to preventing upfront fees, the FTC also requires these companies to more detail about their fee structures. They have to provide in writing a fee schedule that outlines how much you will be charged. This helps you avoid any surprises when it comes to the fees that you could be charged.
When you agree to work with a debt settlement company or debt settlement law firm, the company may recommend that you open a bank account and start saving money for a settlement. According to the rules of the FTC, the bank account has to be in your name and it has to be open at an institution that is insured by the Federal Deposit Insurance Corporation or FDIC. The account cannot be tied to the debt relief company in any way and it must be controlled by the individual.
In the past, debt solutions companies would paint a rosy picture about how amazing settlement would be. They would leave out details about what it can do to your credit or what to expect in the future. Now the Federal Trade Commission requires companies to provide better disclosures about what will happen. The companies have to explain how the settlement could negatively impact the customer’s credit score and make it more difficult for him to get approved for loans in the future.
If you are thinking about getting help with a debt settlement, hiring a debt relief company or debt settlement law firm can make sense. Thanks to the rules set forth by the FTC, there are some more protections out there to help you avoid being taken advantage of. Before agreeing to any deal with a debt relief firm, make sure that you closely review the terms of the agreement and that they are in your favour. Otherwise, you might end up signing something that you regret later on. As long as you are comfortable with the level of service that they are providing, you can move forward and get the help you need.