I am currently in a debt settlement program with 30,000 in debt, I’ve been in it for a year and a half. One of my friends was looking into debt settlement and came across this new law. I started researching it and am now scared. My friend is looking at doing debt settlement but through a company that uses a lawyer.
if this new law goes through (or has it yet) then where does that leave me, will the company shut down? What do I tell my girlfriend, she’s looking at debt settlement because of me?
If the new Debt Settlement Consumer Protection Act goes through I would imagine that most debt settlement companies will close their doors, declare bankruptcy and move on. That will leave all the current clients stranded.
We can’t really vilify the new law as the only reason the companies will probably close because debt settlement companies are currently operating a bit like Ponzi schemes in that they are relying upon current sales to fund current operations. The money consumers paid when they enrolled previously has been paid out to marketing groups and/or spent long before the services were delivered to consumers. Those funds were typically not escrowed and to be taken when the actual service was performed.
The attorney model debt settlement approach is interesting. My opinion is that the attorney model approach is going to come under more fire. In fact it already has in some places and attorneys have lost their license to practice law.
The safe bet at this point if anyone felt debt settlement was the way to go would be to work with a debt settlement company once you have 50% saved to settle with. That way debts could be negotiated right now instead of trying to guess who will still be in business in 5 or 12 months.
Please update me on your progress by posting updates here in the comments section of your question. I’m very interested in how this works out for you.