Get Out of Debt Guy - Steve Rhode

CONSUMER ALERT – Do Not Enroll in Any Debt Settlement Program Before October 27, 2010 That Charges a Fee Before Debt is Settled

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The new Federal Trade Commission rules have now been released that will regulate how fees can be charged in debt settlement programs.

Any consumer that is thinking of enrolling in any debt settlement program before the new rules take effect on October 27, 2010 needs to be aware, after that date a debt settlement company can not charge you a fee before actually reaching a written agreement with your creditor.

Currently most of the debt settlement industry charges 15% of the debt enrolled into the debt settlement program with the first few payments going straight to fees and then a portion of the monthly payment going towards fees. Debt settlement companies also mark up the cost of the escrow services they partner with.

The Federal Trade Commission found that the vast majority of claims made by debt settlement companies regarding the following is unfair, deceptive and abusive.

If you enroll with any debt settlement company before the effective date you should look for a debt settlement program that will not charge you any fee until:

The debt settlement program will need to make the following disclosures in a way you see them and preferably agree to them.

You also need to be aware:

WARNING

Between now and the effective date of the new rules I fully expect debt settlement companies to sell as many people as possible into a non-conforming debt settlement programs in order to collect as many fees and revenue as possible, before they can’t.

Any contract for debt settlement services that does not conform to the new rules entered before October 27, 2010 will continue after the effective date and those agreements have already been determined by the FTC to be deceptive and abusive.

By the debt settlement trade associations own admission, they have predicted 85% of the debt settlement companies around today will go out of business under the new consumer protection rules.

Any money you pay to a debt settlement company in advance of them actually settling a debt for you will most likely be lost when the debt settlement company goes bankrupt if they have not already adopted the new rules and fee collection approach.