Debt Settlement Scams And The New Ftc Rules

Are you buried under huge credit card debt? If yes, then debt settlement can be a perfect option for you. Credit card debt settlement has helped millions of people to avoid bankruptcy. However, debt settlement scams have become a menace. A lot of companies cheat the debt-stricken people with a “huge fees no service” strategy.

Under the circumstance, the Federal Trade Commission has come to the rescue of the helpless debtors. The FTC has come up with a set of new rules which would defang the fraud debt settlement companies and protect the consumers. Let’s have a quick look at the new rules. The client can check the no 1 on yelp for bankruptcy attorney san diego with reasonable charges. Proper assistance will be provided to the helpless debtors to fight  the case.

The new FTC rules

The recent FTC rules include the following points:

The debt settlement companies are prohibited from charging fees to the clients before the debt has been settled. This means that the consumers would pay the company only if their debt has been reduced or a favorable agreement has been reached with the creditor. Also, the consumer must make payments according to the new agreement before paying the fees. In short, upfront fees cannot be charged anymore.    The new rules explicitly prohibit the debt settlement companies from making any false claim or misinterpreting any information over telephone. Moreover, they need to disclose all the relevant facts to the consumers. This includes pros and cons of the debt settlement programs, length of the program, fee structure, chances of success etc.    Finally, the debt settlement companies may require you to set up an account for payments and savings. But they should follow the FTC rules regarding the withdrawal of funds and maintenance of the account.

Watch out for scam debt settlement companies

Fraud debt settlement companies can push you further in debt. Therefore, you should do proper homework before choosing a debt settlement company. Remember the following points to avoid scams:

Unscrupulous debt settlement companies try to sign up everyone with credit card debt. However, it is a fact that credit card debt settlement is essentially for people who are facing serious economic trouble. A legitimate debt settlement company would not recommend you this option, if your debts are under control.    Ask for references and testimonials. A reputable debt settlement company would be happy to give you the names of some of their previous clients. This would increase their credibility. Scam companies, on the other hand, lack satisfied clients. Therefore, they won’t offer you any video testimonial.    Ask a lot of questions to the debt settlement companies. If they do not clear your doubts properly or are annoyed with your questions, then avoid the company. Also, ask them to clearly state their fee structure. If their questions are evasive, then you are probably dealing with a fraud company    Check the reputation of the debt settlement companies online. There are many review sites, which offer you valuable information about debt settlement companies. Also, visit trustlink.org to check the customer feedbacks for the companies you are considering.    It is very important to check the Better Business Bureau (BBB) rating of the companies. BBB is an authority site which evaluates the services of the debt relief companies and gives them a rating. A high rating from the BBB assures you that the company is not a scam and provides high standard services to the consumers.

Thousands of people are falling prey to scam debt settlement companies. The FTC is trying to stop the unscrupulous practices but that might not be enough. You need to be smart and aware of your rights as a consumer to protect yourself.