Debt Relief Industry

How Can I Find Out if I Can Offer Debt Settlement in the Different States? – Roger

Written by Steve Rhode

Dear Steve,

I’ve enjoyed your site for many years. Thank you for your contributions. I do have a question for you that you may be able to help. I’ve had a debt settlement company for about 20 + years. I deal mainly with Commercial, business to business debt and not consumer.

Occasionally I get people wanting me to settle their personal credit card debt from various states. I am away of the FTC restrictions, but I do not know what additions restrictions may apply on a state by state basis. Do you have access to a resource where I can look up each state’s requirements to operate with consumers and businesses within their states?

Thank you.


law books narrow

Dear Roger,

Let me first commend you for doing the right thing and getting the facts.

Frankly it is a dysfunctional patchwork quilt with many states having widely different regulations, licensing, and bonding requirements.

In the past we offered this free compliance program to help companies research the different state rules and regulations.

It was managed by USDR and I have no idea if they are still managing it.

But, just to make double and triple sure you are not wandering into hot water I would strongly suggest you contact one of the following law firms that specialize in debt settlement laws and compliance.

Jeffrey Tenenbaum and Jonathan L. Pompan

Loeb & Loeb
Michael Mallow and Michael Thurman

I would suggest focusing on one state at a time with whoever you decide to work with and making sure you are compliant. Until then you should absolutely avoid Washington, Kansas, West Virginia, Georgia, Colorado and Connecticut.

I can always use your help. If you have a tip or information you want to share, you can get it to me confidentially if you click here.

READ  Rules for Debt Settlement Companies Would Help Protect Consumers

About the author

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.


  • Roger, I am a licensed business broker and frequently run
    into companies that have cash flow or debt issues that diminish their prospects
    of selling their business. We focus on businesses located in Georgia and
    Florida. What state do you operate in? What is the name of your firm?

  • Steve,

    You say you are not sure if the USDR program is still active which leads me to wonder what the true state of the debt relief industry today really is.

    Do you have any idea how many debt relief companies are still operating, how active the industry trade associations etc. are.

    There seems to still be lots of companies marketing debt leads and other services to the industry??

    I believe debt relief services are still very much needed with americans desperately in need of help and I think the industry providing the help will grow again, to me it’s not “if” but “when”. Our DS company is operating as usual and I am sure we will start enjoying some growth again.

    Your thoughts on this appreciated


      • Thanks for your reply Steve, in your reply you mention that there are “a number of reasons holding back the industry from growing again”…I’m sure there are many of us in the industry working hard to get back to a growth curve who would love to hear exactly what you think “the reasons are”.

        Our DS company is still helping consumers while working with difficult cash flow constraints but we feel we can survive the current climate and reach better times.Like I said before it’s not “if” but “when”.

        We see an industry with strong consumer need and much less competition from all debt relief options.

        Sure there are still companies (like Debt Validation of America) closing their doors because they could not adjust to the realities of doing business under the new rules. I’m sure there will always be debt companies filing chapter 7 for many reasons.

        Legislators have tightened the operating rules for businesses and the good companies have adjusted overheads etc. and have hung in there for 2 1/2 years…tell us what else “you” think needs to happen now going forward.

        As a participant in today’s debt relief industry followed by many (consumers and debt professionals) you could help the industry with it’s rebound by sharing your insights.

        Much appreciated.


        • One more link for you.

          I think the number of people enrolling in extended repayment plans will show continued slow growth especially as the economy is slow to recover, if it will in the next coming decades, and as more people worry about future retirement.

          I don’t think the concern has wained at all if Social Security will be there to support seniors when they retire. Instead, more people need to be aware of funding their retirement while they can.

          This link and calculator shows the impact of extended repayment plans and how much they remove from future retirement.

          • Thanks for the links Steve but all of these articles seem to have the same negative (lack of demand) message for debt relief professionals.

            While it may be true that there is less consumer need overall according to these articles how can you ignore the fact that there is dramatically less competion for providers, as you said in your earlier response “The number of companies still operating is a fraction of what it once was”.

            The small number of companies remaining are very heavily regulated and compliant and providing a needed service to consumers.

            I’m not thinking there is any balance in what you are saying regarding the current health and future of consumer debt relief??

            I guess I was hoping that you might be able to share a more complete, balanced and realistic view of the current and future industry, but thanks again for your perspectives.


          • I’m not sure what you are looking for.

            From my point of view in talking to people across all areas of debt relief (credit counseling, bankruptcy, debt settlement) it is the same slow picture. This is at least the second year in a row with no pot holiday big bump. That’s pretty telling.

            We’ve had years of the pipeline getting cleaned out with no new infusion of credit to replace it.

            Credit is flat, demand is down for debt relief, the economy is still lagging along and there is real concern that lost jobs will ever be refilled as efficiency continues to increase and create less demand for future workers.

            As far as increasing demand in a shrinking company market, I just don’t see it since the pool of people who need debt relief services continues to shrink and more people pay on-time.

            If you want lollipops and sunshine, call a trade organization and get the “keep members happy” message. If you want the truth of the landscape on the short/medium term need for debt relief help, I gave it to you.

            I think the view that more people are carrying less debt, are paying better and have less access to unsecured credit is a fairly balanced and self-evident assessment based on the data.

            Until things change, keep your eyes on consumer confidence, it needs to rise dramatically, and the Federal Reserve G19 report to watch for significant increases in unsecured consumer debt (not including student loans.)

          • You pasted a bunch of links but you did not use those facts to support a definitive statement or hypothesis. What is your assertion?

            What are you trying to say and what is the link to the original source data so we can investigate it?

          • “On the household side, domestic banks reported that standards for both prime and nontraditional mortgages were essentially unchanged over the past three months. Respondents indicated that demand for prime residential mortgages increased, on net, while demand for nontraditional residential mortgages was unchanged. Within consumer lending, a moderate fraction of domestic banks reported an easing of standards on auto loans, on net, while standards on other types of consumer loans were about unchanged. On balance, banks indicated having eased selected terms on consumer loans over the survey period. A moderate fraction of respondents continued to experience stronger demand for auto loans, on net, while demand for credit card loans was reportedly unchanged.”

            “Responses from domestic banks indicated that they had again eased standards on auto loans over the past three months. However, standards on credit card loans and other consumer loans were little changed. On balance, several banks reported that they had reduced spreads on consumer loans other than credit card loans. A modest fraction of banks also reported having increased the maximum maturity of auto loans on net. Other terms for consumer loans were reportedly little changed over the past three months.

            Demand for auto loans reportedly increased on balance, while demand for credit card loans was essentially unchanged. A modest fraction of banks reported stronger demand for other consumer loans on net.”

            “Overall, large fractions of domestic banks, on net, expected improvements in delinquency and charge-off rates during 2013 for most loan categories included in the survey, assuming that economic activity progresses in line with consensus forecasts.”

            “Among major loan categories, domestic banks were least likely to expect improvement in the quality of consumer loans in 2013. On balance, about 10 percent of banks expected improvement in credit card loans, and similar fractions projected improvement in auto and other consumer loans.”


          • Melissa,
            I hate to be captain obvious here, but you asked Steve for his opinion and insights. He gave them to you and you got upset and claim he didn’t give you a complete picture simply because he didn’t say what you hoped he would say.

            Why even ask at all if you don’t want to hear anything that doesn’t fit what you hope will happen?

            Lets not forget that many of these bad actors artificially drove up demand for debt settlement with their dumb ass radio and TV commercials. Now that those are gone, the “artificial demand” is gone along with the real demand dropping because over the last 5 or 6 years, many people that got in trouble have already dealt with it and there has not been much new consumer credit issued, (unless you count student loans).

            So yes there is less competition, but the demand has dropped even more significantly.

            What event or circumstance can you point to that leads you to believe that demand for debt settlement service is about to spike again?

          • Wow…wasn’t expecting to be tag teamed.

            Damon I’m not upset with what Steve had to say.

            If you look at all the data that Steve relied on for the articles he wrote the actual statistical % of change over previous years with each scenario is not ridiculously high (most under a 10% change +-), sure data that would affect demand for debt relief services indicates there should be less overall demand for services in recent years but the debt relief service industry (number of providers) has shrunk dramatically.

            It doesn’t take a rocket scientist to know that there is still substantial debt relief business opportunity for fewer service providers. Consumer demand is still there, not everything is rosey for consumers! Credit is still being dished out…sure not as much but the credit card companies are still handing it out.

            Steve, I’m not looking for lollipos & sunshine and Damon I’m not “hoping” for all good news from Steve’s opinion and insight. I’m in the field everyday talking with debt strapped consumers and I know better, I just wanted Steve’s “balanced” view of the industry (some pessimism & some optimism).

            I believe there is a brighter future for the hard working debt settlement pros and their companies and it is not necessary to fold up our tents quit, consumers would be left without a very valuable service.

            I look forward to a constructive reply if you feel it necessary to challenge what I’m saying.


          • Maybe I can try a different approach.

            If what you say is true…

            1. Demand for your service has not really dropped off more than 10% or so.

            2. The number of providers has shrunk dramatically.

            Then why do you not have more clients?

          • Damon,

            You should read my post before commenting.

            I did NOT say that “demand for our services has not really dropped off more than 10% or so”.

            Where do you get that?

            In your quest to “get the last word” you totally missed all the points made, why don’t you leave the dialog to Steve who at least makes valid points in defending his perception of what is going on in our market.


          • Actually I was trying to do you a favor and walk you through a critical thinking exercise, to hopefully enlighten you to the fact that what you hope for is not likely to happen.

            However, if you would prefer to bury your head, and only seek out information that validates your assumptions, then be my guest.

            PS. if I was trying to get the last word then why would I end the post with a question?

          • Damon,

            I work in the industry full time speaking with debt ridden consumers everyday. I am not looking for validation from Steve (or you now that you have chimed in with your wisdom) that demand for our services is again on the rise. I just asked for his educated opinion of the current and future state of the industry. He has provided his take on this and I respect his perception of what some of the data shows.

            Those of you who “hope” that demand for debt settlement services is currently miniscule and dropping may also have your head in the sand!

            Also your comment that ” bad actors artificially drove up demand for debt settlement with their dumb ass radio and TV commercials.” is brilliant (sarcasm), I guess the people who responded to these ads weren’t in financial distress at all, the dumb ass ads just made them think they were…umm.

            Your comments regarding debt settlement on this blog are consistent but you do understand that there are very good people and companies working hard in a compliant way to provide this alternative to consumers…don’t you?

            You get the last word…I’m out of here!


          • Melissa, I don’t think anyone hopes that demand for debt settlement drops. Debt settlement is an appropriate solution in some very narrowly defined situations.

            Your “business” might be increasing but in general the word from other companies is that things are slow, very slow.

            If you’d like to submit a guest post and talk about how your company is dealing with growth in a down market, I’m sure many readers would be interested in learning more about what you have to say. Contact me to submit it.

            Just keep in mind that your micro level observations of the debt relief industry may not be consistent with the macro level factors that drive demand for consumer debt relief options.

            In down markets it just is far too easy for debt relief companies to oversell their widget.

            Keeping that in mind, moving forward I see fiduciary liability as a growing concern debt relief companies need to be aware of. The potential for large suits over this is huge if people are enrolled in programs without clear disclosures what an extended repayment program will cost them in lost retirement funds.

            I can see lawyers making the claim their client was significantly financially harmed because the needs of the debt relief company were put ahead of the consumer to whom they had a fiduciary responsibility.

            That would be the newest liability moving forward to watch for.

            As an example of this, see

          • Steve,

            I know I said I was “outta here” in my last response to Damon but I have to respond to your post…

            I did not say anywhere in my posts here that our “business is increasing”…it is not but we are hanging in there.

            Thank you again for your perspectives and I hope that others in the industry would add any feedback they have regarding the current market and future expectations to this string…


          • there has been discussion here on the fiduciary duty of debt relief companies in the past, this is important for providers of all debt relief options, credit counselors, consolidation loan lenders, bankruptcy attorneys and debt settlement companies.

            all of these providers need to thoroughly educate their potential client on all of their other options not just debt settlement companies…just saying

          • I wanted to respond to this as well.

            You said “I guess the people who responded to these ads weren’t in financial distress at all, the dumb ass ads just made them think they were…umm.”

            Actually the way it works is that people sometimes go for years limping along paying their minimum payments. They don’t proactively do anything with it. When they see ads on TV promising the world, smaller easy monthly payments, cutting their debt in half etc, it prompts them to act.

            Further debt settlement is not as well known as BK or CCCS so unless prompted by an ad or a commercial, many consumers would not even think about debt settlement.

            So yes, my point is very valid. When the ads go away, the demand for the debt settlement services they promoted drops off.

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