I’ve been out straight, and just haven’t had a chance to post for several weeks. Fortunately for me, Sophie Kinsella, a financial blogger, offered the guest post set out below. I’m glad to have it, and would only add that states concerned about debt settlement companies should take a look at the Uniform Debt-Management Services Act, as amended in 2011.
“The FTC has passed a new set of rules for all the for-profit debt settlement companies soon after the BBB received a number of complaints against the deceptive practices taken resort by the debt settlement companies. According to recent reports, the Attorney General of Ohio, Mike DeWine sued a couple of debt settlement companies in California accusing them of overcharging the consumers who are already going through a distressed financial state. Most of the things that are promised by the debt settlement companies aren’t delivered and this is causing enough concern among the hapless debtors.
According to the lawsuit, Jeremy Nelson, a representative of Trabuco Canyon was misleading the consumers by claiming that their company is able to cut the debt amount by half and relieve the debtors of the increasing debt burden. If you too have been subject to such claims from debt settlement companies, you should be aware that they’re just scamming you into taking wrong decisions about your debt.
As per the lawsuit that has been filed in Franklin Country Common Pleas Court, the companies in question have been accused to charge the debtors with a fee of $199, which is higher than $75, the initial consultation fee that is actually allowed by the Debt Adjuster’s Act within the state. The debt consultants who were responsible for negotiating with the creditors haven’t shown enough concern. The consumers who were already behind on the monthly credit card payments fell further behind as they were asked not to make payments to the credit card companies while working with the debt settlement companies. The company consultants weren’t able to produce the results that were promised by them and they even failed to give refunds to the consumers who didn’t receive the promised services from the companies.
The Attorney General, DeWine lawsuit even reported that the companies portrayed them as a law firm but they mislead the consumers in taking wrong financial decisions by posing to be trustworthy firm. The consumers who signed up couldn’t ever contact the lawyers to complete this process. The lawyers who practice in California require being members of the State Bar of California and according to this organization there wasn’t any record of Jeremy Nelson to practice law.
As there are an increasingly large number of debtors who are facing similar issues with the debt settlement firms, the FTC has passed the rules according to which no for-profit debt settlement firm can charge upfront fees from the debtors before reducing a portion of the outstanding debt burden. They should represent the services in actuality and not boast things that they’re not capable of doing. The debt consultants who are working over the telephone should not misrepresent their services so as to gain customers. If you come across such debt settlement companies, you should be aware of the rights and immediately file a complaint with the FTC for the required steps to be taken.
Therefore, as there are more and more news about the deception of the debt settlement firms, you should remain watchful while approaching such a firm. Make sure you don’t work with a scam company as you may end up falling in huge amount of debt in the near future due to the illegal steps taken by the debt settlement companies.”