An article in The Hill talks about how the Debt Settlement industry is now hiring lobbyists to meet with members of Congress in order to make their case to continue to exist. Many states and the Federal Trade Commission have reloaded their regulatory shotguns and taken aim at rogue debt settlement companies in the past few years in hopes of regulating the industry out of existence.
The debt settlement industry could be cleaned up swiftly with one sweep of federal legislation that would regulate the practice in all states. That I’m all for.
As an industry there are some good and honest players out there but the rouge companies will take down everyone unless the industry gets serious about taking aggressive action to police itself.
Probably the biggest concern of the article is the statement:
Credit Solutions, founded in 2003, has $2.25 billion in debt under management, and says it has settled $900 million over all. In March, Texas Attorney General Greg Abbott sued the firm for false and deceptive business practices. In May, Cuomo filed a similar suit, arguing that 18,000 New Yorkers had signed up with Credit Solutions between 2003 and 2008 but that the firm did little to help its clients. – Source
This tells me that CSA has only settled 40% of debt they have managed and that doesn’t even begin to give us an accurate success rate of consumers that were able to have all of their debts settled to fully resolve their debt situation. That 40% number is just a reflection of their official statement of the total piecemeal debts they have settled. This just further supports my disturbing finding in The Truth About The Failure Rates and Completion Rates of Credit Counseling, Debt Settlement, and Bankruptcy.
What will be interesting to watch is to see how many members of Congress are swayed by the lobbyist arguments. With so many rouge debt settlement companies out in America today, if members of Congress looked at the landscape maybe they’d be hesitant in legislation that helps support scammers and liars. But then again, aren’t the banks the biggest lobbyists in Congress? Oh well, so much for that argument.