On the phone today and had some very enlightening conversations with inside sources on the Hill who must not have received the memo that S.3264 the Schumer-McCaskil Debt Settlement Protection Act is dead and forgotten, killed by TASC and USOBA lobbying. Members on the Hill are preparing to continue pushing S.3264 and are very confident it will get passed.
We had a very frank and open discussion about the behind the scenes activities and while the debt settlement trade associations and debt settlement companies have been making rounds on Capitol Hill, they have come across in such a negative way that it only reinvigorates regulators and legislators to pass tough debt settlement regulation.
A couple of key points were made about S.3264 and the changes that were subsequently made to it.
Fee Increase to 10%
An adjustment in performance fees for debt settlement companies was made from the original suggestion of only 5% of the actual settled debt. In the latest modification of the bill this was changed to 10%, but that was a hard fought battle. Insiders say that the push back from big consumer groups with influence was that was as far as they were willing to go.
Banning Attorney Based Debt Settlement Companies
If any attorney feels that in upcoming regulation, that just because they are an attorney they will get a free pass and be allowed to front a debt settlement company, don’t be confident.
Another change to S.3264 was tougher regulation to restrict attorneys from engaging in debt settlement. And this change was negotiated with the American Bar Association and they participated in the tougher changes I published here.
Bipartisan Support
While it seems like almost no legislation these days passes with strong bipartisan support, the impression as of today is that while some Republican Members of Congress bought into the USOBA attempt to influence the FTC it is unlikely that a vast majority of Republican members will want to stand behind the debt settlement industry which has created a broad anti-consumer reputation for itself.
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Hi Steve,
Extremely interesting article. I also just read your “Going Offshore article” and learned about the future plans of these debt companies. I was thinking could you talk to your inside government sources again, and warn them about what the debt companies are planning next, ie going offshore, the bank model, the do it yourself kits, etc. It seems the congressmen need to be warned that these debt companies, like mutating bacteria, are just going to morph into new forms. The proposed law should somehow cover these new mutations better.
Oh they know and many regulators read my debt industry articles regularly.
Steve