Yesterday (June 29, 2010), the Federal Trade Commission (FTC) made a HUGE announcement on new rules that govern the Debt Relief industry. These rules will greatly affect the debt settlement industry’s future. The rules change a number of things, here are the highlights:
- Debt Settlement companies can no longer charge any fees until they have settled your debt
- More disclosure of information required – this includes exact program costs and length as well as negative consequences
- Can no longer make false or unsubstantiated claims about the service
These rule changes go into effect on October 27, 2010. Of these 3, the first one is obviously the biggest change. Almost all settlement companies charge 15% of your total debt amount which generally means your first 3 full payments plus part of your monthly payments for the first year. TASC has fought this change vigorously and claims it will put many settlement companies out of business.
What does this mean for you, the consumer? It means that there is going to be a very turbulent period over the next 6 months in the industry. A large amount of settlement companies will undoubtedly shut down because of this. I would strongly suggest people to try to wait things out until the end of the year if you are thinking about signing up for a debt settlement program. Another good option is to try a do it yourself debt settlement program.
