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Consumer Debt Restructuring is Not a Magic Solution. Still a Target of Regulators.

Just a quick word of advice. Seems like chatter is heating up about something called Debt Restructuring and is being pitched as some cutting edge tool to help people out of debt.

Debt Restructuring

This press release sent in by a reader caught my eye.

Las Vegas (OPENPRESS) July 26, 2011 – The debt settlement industry has been in sort of a flux in the past few years, a result of regulations imposed by the FTC to protect consumers. As a result, many debt settlement companies have either run out of business or continue to struggle financially because of the new regulatory climate.

Debt Restructure USA is pioneering a new method in the debt market dubbed Debt Restructuring. In technical, legal FTC-compliant terms: “debt settlement” is the “negotiation” of a debt, whereas “debt restructure” is the “alteration” of original debt through either change of creditor or change of debt terms and conditions. This in turn enables consumers to pay their monthly payments at the same time while their debt is being restructured.

With this new method in high demand, the company created and released the beta version of its patent pending platform titled Debtor Soft. Debtor Soft is a web based debt management software platform system that aims to bring debtors, creditors, debt buyers, market facilitators, counselors, attorneys, and debt service providers together in a single and integrated platform. By bringing all involved parties into a single network, Debt Restructure USA aims to increase efficiencies by streamlining the debt restructuring process through its online portal. Ultimately resulting in the fastest debt relief in the industry.

Debt Restructure USA depends mainly on affiliates to drive the growth of its program. In return, the Debt Restructure business model allows its affiliates to realize higher sales closing rates and higher customer retention rates versus those in the traditional debt market industry. This creates more of an incentive for their affiliates to join a fast growing debt restructuring market.

Debt Restructure USA a New Target

Let’s not kind ourselves here, debt restructuring as defined runs into some serious compliance issues when providers or affiliates, for a fee, are acting to intervene between a debtor and creditor. In fact that’s the target of the new CFPB and the FTC has it’s eye on it already.

And then when you go to the DebtRestructureUSA.com site we discover the folks behind this are Cyrus Global.

Consumer Debt Restructuring is Not a Magic Solution. Still a Target of Regulators.

In my experience, Cyrus Global has proven themselves to be dubious and unable to substantiate most of their past claims. See these article on Cyrus Global.

The press release put out by Debt Restructure USA claims that Debtor Soft is a patent pending platform. Only one problem, the U.S. Patent and Trademark office has no record of that product under that name and there is no corresponding trademark on file for Debtor Soft either. Publishing the pending patent number would help to substantiate that claim.

Debt Restructuring is define like this by one company, ClearPath Financial, that is promoting the Debtor Soft solution:

Phase I: Debtor Restructure Plan Development and Agreement.
Our debt counselors will assist you in analyzing your financial condition and in developing a debt restructure plan that is most suitable for you. Once you agree to your debt restructure plan, our debt counselors generate a Debtor Restructure Agreement with the best terms and conditions to resolve your debt default and redeem your credit and get you back to a healthy financial condition.

Phase II: Creditor Restructure Offer Exchange and Agreement.
Creditor restructure alters your debt by exchanging your current debt holder with a new debt holder under the terms and conditions of the Debtor Restructure Agreement. We accomplish this through the Debt Buyers program. We solicit your debt holder’s cash purchase price, combine it with your terms and conditions, along with the agreed upon debt restructure fees, and present it all to a debt buyer associated with our program. Once the debt buyer accepts the offer, the debt buyer becomes the new debt holder and creditor, and you can make your payments under Debtor Restructure Agreement terms and conditions. – Source

But let’s look more into what debt restructuring really is.

See Consumer Debt Restructuring 101: What It is and What You Need to Know About It to Stay Out of Trouble for more information.

Consumer Debt Restructuring is Not a Magic Solution. Still a Target of Regulators.
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About Steve Rhode

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.
  • Manny

    How is THIS: 
    Debt Restructure USA is pioneering a new method in the debt market dubbed Debt Restructuring. In technical, legal FTC-compliant terms: “debt settlement” is the “negotiation” of a debt, whereas “debt restructure” is the “alteration” of original debt through either change of creditor or change of debt terms and conditions. This in turn enables consumers to pay their monthly payments at the same time while their debt is being restructured.Not THIS?: OCT 27, 2010 FTC Rule- The new Rule defines a “debt
    relief service” as a program that claims directly,
    or implies, that it can renegotiate, settle, or in some way change the terms of
    a person’s debt to an unsecured creditor or debt collector. That includes
    reducing the balance, interest rates or fees a person owes.PLEASE

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