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40 States Band Together to Regulate Debt Settlement Companies

The attorneys general of Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Guam, Hawaii, Idaho, Illinois, Iowa, Kansas, Maine, Maryland, Massachusetts, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Vermont, Washington, West Virginia and Wyoming have written to the Federal Trade Commission and asked for tighter regulation of debt settlement and debt relief companies.

Last year, at the height of the economic downturn, consumer debt-related issues surged to the top category of complaints filed with the Attorney General’s Consumer Fraud Bureau, including credit card debt, abusive collections and deceptive debt settlement practices.

Consumers with debt settlement complaints typically report that, after they enroll in debt settlement programs, the firms charge excessive upfront fees and advise consumers to stop paying their credit card bills.

All too often, consumers report that after they make many upfront monthly settlement payments, the debt settlers fail to negotiate with consumers’ credit card companies. As a result, the credit card companies add interest, fees and penalties to consumers’ credit card balances and begin collection efforts to recoup the debt, which in turn negatively impacts consumers’ credit reports. In many instances, credit card companies have sued consumers enrolled in debt settlement agreements in an attempt to collect the balance of the consumers’ accounts. Source

Sincerly,
Steve

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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.

2 Comments

  • What states are currently band for debt settlement. In the year of 2010. Also interestd in damon day ?

    • I am not aware of any states that ban debt settlement. There are some states with very few registered companies authorized to do business.

      If you want more information on Damon Day, visit his site, click here.

      Steve

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