Debt Consolidation – Fed Implements New Rules

Debt Consolidation Rules Change.

Federal regulators today will begin the first phase of new debt consolidation guidelines to defend consumers against loan settlement firms that are into scams meant to deceive the public.

These settlement companies often make dubious claims that they can cut their clients' credit card debt  but often charge a large upfront fee.

However, the companies take little action and the customers' debt is worse than before the deal is made.

The changes in the rules of the Federal Trade Commission  involves how debt relief offerings are marketed to potential clients.

Among the specific rule changes are forbidding misrepresentations of products like debt consolidation, success rates, or any other pertinent product features. Firms also need to disclose the potential risks of a settlement and how long it takes for the client to see results.

“This is really a best case scenario for consumers,” said Brad Stroh, CEO of Bill.com. “Consumers will now have substantial and important protections in place to ensure that they are not taken advantage of by predatory debt relief providers.”

“At the same time, responsible providers will be rewarded for their efforts and can stand apart from less reputable companies — making it even easier for consumers to find help from the good actors in the debt relief industry,” Stroh added.

The second phase of debt consolidation rule changes, which will begin on October 28, 2010, will do away with the notorious upfront fees the companies are charging customers. Any charges will be required to be paid only after the clients have seen proof of debt relief.

Posted by James Fried on Tuesday September 28 2010, 3:09 AM EST. All trademarks acknowledged. Filed under Featured News. Comments and Trackbacks closed. Follow responses: RSS 2.0