Cons promising debt reduction and consolidation still around

Debt reduction and consolidation businesses seem to have spread like wildfire in the past couple of years. Not all of these corporations are exactly honest, though most are perfectly fine. Not all of these debt relief businesses seem to have gotten the memo.

Not paying attention to Federal Trade Commission rules

The Federal Trade Commission started some new rules up over half a year ago to stop fake debt settlement and debt settlement businesses from stealing from individuals. KNDU is a Washington state NBC affiliate. According to KNDU, debt servicing businesses are not allowed to misrepresent themselves, have to make information accessible at first and aren’t allowed to ask for advance fees. Exactly how much money an individual can save and what the fees are in the service have to be explained upfront. However, many corporations aren’t following the law.

Getting a company in trouble

Laws for debt services were not being followed by Freedom Debt Relief. This is what the states of New York and Washington discovered in a sting, WalletPop explains. The California firm was found to have misled consumers in those states. In both cases, the company settled. It settled for $2 million in payments in customers. The business previously settled comparable cases with four other states and is currently part of a class action lawsuit. The Wall Street Journal states the Federal Trade Commission won two large settlements against companies that were illegally “robocalling” customers with messages on their phones. The two businesses promised reduced debt for a hefty fee when robocalling individuals. These businesses were Dynamic Financial Group and Advanced Management Services NW. The corporations both would send a card telling customers that they simply have to pay their bills on time. Advanced Management Services did offer a refund if it didn’t ! work though.

Nothing in life is free or simple

The old maxim that “if it looks too good to be true, it probably is” holds true when it comes to debt settlement businesses. The Federal Trade Commission and Federal Deposit Insurance Company agree on one thing. They both suggest anything that says you can pay “pennies on the dollar” to get something removed from your credit is a scam you should avoid. Also, it is illegal for any debt settlement or debt reduction company to ask for any money whatsoever until after the debt is reduced or somehow changed. Customers can get a debt reduction plan from nonprofit debt counselors too. According to the FDIC, don’t go straight for the for-profit debt reduction services. Try the not-for-profit credit counseling first. You are able to get help from the National Foundation for Credit Counseling. This will be where financial advisors in your area could be found.

Information from

Walletpop

walletpop.com/2011/03/08/freedom-debt-relief-agrees-to-pay-back-consumers-after-accusatio/

KNDUO/p>

kndo.com/story/14696586/how-new-federal-debt-relief-rules-protect-consumers

Wall Street Journal

online.wsj.com/article/BT-CO-20110526-711657.html

FDIC

fdic.gov/consumers/consumer/news/cnfall10/debtoverload.html

FTC

ftc.gov/bcp/edu/microsites/moneymatters/dealing-with-debt-relief-services.shtml

NFCC

nfcc.org/