Maryland legislators for the fourth year in a row will consider regulating debt settlements, and new recommendations in a report out this month may be the charm.
In Maryland, legislators have tried three times to regulate the industry. Sen. Thomas “Mac” Middleton, chairman of the Finance Committee, says his committee requested a study before the next session begins in January. A balance must be reached to protect consumers while still allowing responsible companies to offer debt settlement to those who need it, says Middleton, a Charles County Democrat.
The report concluded that legislation is needed in Maryland and should include the following:
- Debt settlers doing business here should register with the state. After two years, regulators should consider whether licensing is necessary.
- Fees would be based on the amount of debt initially enrolled in the program — not any additional interest and penalties — and should not exceed 30 percent of the amount forgiven.
- Consumer protections under the new FTC rules, as well as any state law, should extend to debt settlements done online, face-to-face and solely within the state — situations not covered by the federal law.
- The law would not apply to lawyers who do debt settlements as a small part of their practice.
But David Leuthold, a member of The Association of Settlement Companies that participated in the study, says his only objection is the recommended fee cap. It might not provide enough money for many debt settlers to operate at a profit, he says.
Source: Baltimore Sun
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