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Prestige Financial Solutions Declares the Debt Settlement Industry is Dead

An interesting press release out today from Prestige Financial Solutions declares the debt settlement industry to be dead. Prestige Financial Solutions is a debt settlement company. – Source

Prestige Financial Solutions Declares the Debt Settlement Industry is Dead
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The Press Release

The Debt Settlement Industry Is Dead!

TASC (The Association of Settlement Companies) has seen over a 60% reduction in its membership of debt settlement companies since the beginning of 2010!

DENVER, April 7, 2011 /PRNewswire/ — As our economy struggles to recover, the same is happening for the average consumer. Americans have been falling deeper into debt using credit cards just to pay for basic living expenses. The credit card debt relief alternative known as debt settlement, as an industry is all but dead; leaving millions of people destined to bankruptcy.

At the start of 2010 there were over 200 debt settlement companies as members of TASC offering debt settlement services. According to the TASC website in 2011 their members have dropped to less than 60, close to a 70% drop in membership. [Actually as of today it is 45.]

Why? In October 2010 the FTC (Federal Trade Commission) enacted rule changes for the debt settlement industry. The major change is the way in which debt settlement companies can collect fees. No longer can a debt settlement company charge fees in advance prior to settling their client’s debt. This has severely affected the cash flow of these companies; thus starting the implosion of the debt settlement industry.

Prior to 2010 the FTC received numerous complaints about the debt settlement industry, and after years of investigation determined that changes needed to be made to protect consumers from losing their money. The vast majority of these companies were charging fees in advance of settling their clients’ accounts; however, they were not delivering the services promised!

Companies that are going to survive these changes by the FTC will have to adhere to their rules of not charging advance fees, while still providing the level of service expected by the American public.

Prestige Financial Solutions the country’s leading provider of Pay As You Settle debt settlement services, foresaw these changes well in advance of the October 2010 rule changes. For over a year before these rulings were made PFS was successfully running the Pay As You Settle model.

Since the beginning of the implosion of the debt settlement industry Prestige Financial Solutions has not only survived but is growing. Eric Thompson, founder of PAYS has said, “I have found consumers very receptive of still having an alternative to bankruptcy without risking any money before a settlement has been reached. This is the way of the future for the debt settlement industry!”

SOURCE Prestige Financial Solutions

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Steve Rhode
Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
  • Michael

    Thanks. That broad of a definition makes more sense.

    I personally think the number is high unless it includes lead gen too.

    I personally do not think there have ever been more than a few hundred companies operating at any given time that provide the actual direct to consumer service of settling debts.

  • Khaleal

    I appoligize, I should have clarified that when I made the statement. Bout a year ago, the company I work for brought in an Atty that worked for the FTC that deals with debt sttlement agencies. I dont recall her name offf the top of my head. The 5k number is front end seller, affiliates, back end negotiators, and full sevice shops. The current number of 550 is an best guess right now. The company I work for is currently trying to see who is really left in the industry.

  • Michael

    Khaleal,

    How did you come up with the 5000 count from a year ago? What is used to define a DSA to include it in the count?

  • Khaleal

    Not trying to open a can of worms, just curious. The last count I had over a year ago, there were over 5000 DSAs. by my best count of companies on the radar is about 550. I am trying to guage the market place now and see who is really left. in one of Steve’s articles he reported there are over 700,000 accounts between GCS and noteworld. The largest DSA I am aware of has over 100k customers. Just curious……

  • SeanDSLegalPlan

    newaacc.com A few of us have been providing performance based settlement for many years- Some for over a decade.

    FROM THE ARTICLE:
    “Since the beginning of the implosion of the debt settlement industry Prestige Financial Solutions has not only survived but is growing. Eric Thompson, founder of PAYS has said, “I have found consumers very receptive of still having an alternative to bankruptcy without risking any money before a settlement has been reached. This is the way of the future for the debt settlement industry!””

    Welcome to the future…

  • Shhhh

    Khaleal – You are opening a can of worms with that question…there are many, many more out there, trust me, but the cost of obtaining bonds and licensing is causing most to operate very quietly.

    The problematic Attorney model is taking the attention of the regulators so the mentality is – do the right thing, run a clean business and as long as no one complains then it’s business as usual. The issue with Bonding is that those requirements were created to stop the DM guys who were taking physical possession of clients funds from simply walking away – not for Debt Settlement.

    In my opinion, if a DS company does not take possession and does not collect fees until a settlement there is ZERO risk and should be exempt from bonds (but not from licensing).

    What good is a $50,000 bond for companies with 50 clients in that state and at the same time, isn’t a $50,000 bond worthless for a company with thousands of clients in that state?

  • Really??

    I think you missed the sarcasm behind Get Real’s comment. Are companies that follow FTC rules post 10/2010 really looking for a pat on the back? Where were you prior to the changes and what took you so long to become “the rest of the honest providers”?

  • Khaleal

    Nothing new here. Good article none the less. What I am interested in seeing is an actual list of the companies (DSA) that are left in business. I know of two that have limping along for bout a year. One of which went to a no advance fee model over 2 years ago.

  • Khaleal

    Nothing new here. Good article none the less. What I am interested in seeing is an actual list of the companies (DSA) that are left in business. I know of two that have limping along for bout a year. One of which went to a no advance fee model over 2 years ago.

    • Shhhh

      Khaleal – You are opening a can of worms with that question…there are many, many more out there, trust me, but the cost of obtaining bonds and licensing is causing most to operate very quietly.

      The problematic Attorney model is taking the attention of the regulators so the mentality is – do the right thing, run a clean business and as long as no one complains then it’s business as usual. The issue with Bonding is that those requirements were created to stop the DM guys who were taking physical possession of clients funds from simply walking away – not for Debt Settlement.

      In my opinion, if a DS company does not take possession and does not collect fees until a settlement there is ZERO risk and should be exempt from bonds (but not from licensing).

      What good is a $50,000 bond for companies with 50 clients in that state and at the same time, isn’t a $50,000 bond worthless for a company with thousands of clients in that state?

      • Khaleal

        Not trying to open a can of worms, just curious. The last count I had over a year ago, there were over 5000 DSAs. by my best count of companies on the radar is about 550. I am trying to guage the market place now and see who is really left. in one of Steve’s articles he reported there are over 700,000 accounts between GCS and noteworld. The largest DSA I am aware of has over 100k customers. Just curious……

      • Michael

        Khaleal,

        How did you come up with the 5000 count from a year ago? What is used to define a DSA to include it in the count?

      • Khaleal

        I appoligize, I should have clarified that when I made the statement. Bout a year ago, the company I work for brought in an Atty that worked for the FTC that deals with debt sttlement agencies. I dont recall her name offf the top of my head. The 5k number is front end seller, affiliates, back end negotiators, and full sevice shops. The current number of 550 is an best guess right now. The company I work for is currently trying to see who is really left in the industry.

      • Michael

        Thanks. That broad of a definition makes more sense.

        I personally think the number is high unless it includes lead gen too.

        I personally do not think there have ever been more than a few hundred companies operating at any given time that provide the actual direct to consumer service of settling debts.

    • Anonymous

      newaacc.com A few of us have been providing performance based settlement for many years- Some for over a decade.

      FROM THE ARTICLE:
      “Since the beginning of the implosion of the debt settlement industry Prestige Financial Solutions has not only survived but is growing. Eric Thompson, founder of PAYS has said, “I have found consumers very receptive of still having an alternative to bankruptcy without risking any money before a settlement has been reached. This is the way of the future for the debt settlement industry!””

      Welcome to the future…

  • HProvider

    Get Real should do just that.

    If you are a debt settlement company abiding by the new TSR you should wake up every morning with a watchful eye regarding supposedly legal model providers. The legal model is just a patsy to collect fees and it will continue to bring the industry under fire and to its preverbial knees.

    Unfortunately on average the FTC takes between 8-24 months to do investigations. What does that mean? Well certainly it allows for any debt settlement provider who potentially comes under scrutiny by a FTC CID or other agency the ability to operate for 8-24 months with little changes to their model.

    The FTC and Consumer Protection Agency should aggessively pursue and disbar any attorney offering services with an advance fee. There should be trials, criminal charges and jail time issued to those who collected fees upfront.

    Sadly companies acting under this model disallow honest providers to continue to operate as they will run out of cash trying to compete with the attorney model.

    Steve should be non-stop on continuing to aggressively bring to light the legal model providers not abiding by the TSR and they should have their offices visited. Employees of such firms should provide Steve with whatever intel possible. The major news outlets need to pick up a story and crush the legal model.

    Steve we are counting on you little buddy.

    Sincerely,

    The Rest Of The Honest Providers

  • HProvider

    Get Real should do just that.

    If you are a debt settlement company abiding by the new TSR you should wake up every morning with a watchful eye regarding supposedly legal model providers. The legal model is just a patsy to collect fees and it will continue to bring the industry under fire and to its preverbial knees.

    Unfortunately on average the FTC takes between 8-24 months to do investigations. What does that mean? Well certainly it allows for any debt settlement provider who potentially comes under scrutiny by a FTC CID or other agency the ability to operate for 8-24 months with little changes to their model.

    The FTC and Consumer Protection Agency should aggessively pursue and disbar any attorney offering services with an advance fee. There should be trials, criminal charges and jail time issued to those who collected fees upfront.

    Sadly companies acting under this model disallow honest providers to continue to operate as they will run out of cash trying to compete with the attorney model.

    Steve should be non-stop on continuing to aggressively bring to light the legal model providers not abiding by the TSR and they should have their offices visited. Employees of such firms should provide Steve with whatever intel possible. The major news outlets need to pick up a story and crush the legal model.

    Steve we are counting on you little buddy.

    Sincerely,

    The Rest Of The Honest Providers

    • Really??

      I think you missed the sarcasm behind Get Real’s comment. Are companies that follow FTC rules post 10/2010 really looking for a pat on the back? Where were you prior to the changes and what took you so long to become “the rest of the honest providers”?

  • Get Real

    This is a silly press release that needs a much more relevant and accurate title. At the time the FTC ruling went into effect, it was well predicted throughout the industry that 70% of service providers would go out of business. Congratulations Prestige! You are one of the survivors…
    Rather than writing about the death of the debt settlement industry, why don’t you spend some time going after the attorney models or something? If you don’t take some sort of a stance against them, this industry may very well be dead soon.

  • Get Real

    This is a silly press release that needs a much more relevant and accurate title. At the time the FTC ruling went into effect, it was well predicted throughout the industry that 70% of service providers would go out of business. Congratulations Prestige! You are one of the survivors…
    Rather than writing about the death of the debt settlement industry, why don’t you spend some time going after the attorney models or something? If you don’t take some sort of a stance against them, this industry may very well be dead soon.

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