Not all debt settlement or debt consolidation companies are reputable and legitimate. Unfortunately, this has caused some debtors to be taken advantage of by unscrupulous individuals. In an effort to protect vulnerable debtors who might be swindled, many states and the Federal Trade Commission monitor debt relief companies for dishonest or deceptive behavior. In addition, the FTC will occasionally create new regulations that these companies must abide by. Even if the rules do not apply to all debt relief companies, debtors familiar with them are better equipped to know when a particular debt relief company with whom they are dealing is engaging in questionable practices.
The Federal Trade Commission and Telemarketing Sales Rules
The Federal Trade Commission is the federal agency responsible for regulating debt relief companies. In 2010, the FTC updated some of its rules regarding telemarketing. These rules affect some debt relief companies and prevent affected companies from charging upfront fees unless certain conditions are met. Specifically, the new rules affect debt relief agencies that:
- Are for-profit companies;
- Provide services relating to unsecured debt (like credit cards and medical bills); and
- Provide services in response to a call from the debt relief company (such as an unsolicited call) or a call from the debtor (who sees an advertisement and calls in response, for example).
Before these affected businesses can charge any upfront fees, the company must tell you the following:
- The time necessary to obtain the results they promise you;
- The date by which the company will make settlement offers to your creditor(s);
- What percentage or amount of each total debt needs to be accumulated before the company will make a settlement offer;
- If you are told not to pay your creditors during the program, you must be told about the possible negative consequences of doing so (such as negative credit report information and lawsuits); and
- Your ability to cancel the contract and receive a refund within seven days.
State Laws and Regulations
In addition to the FTC, nearly every state regulates the debt relief industry in some fashion. Some of these rules and regulations vary from state to state. Each state’s attorney general’s office would be familiar with the various state regulations that apply to debt relief companies.
What Should I Do if I Believe I’ve Been Taken Advantage of by a Debt Relief Company?
If you hired a debt relief company to consolidate or settle your debts and you believe the company deceived you or violated a regulation, you should act quickly in order to protect your rights. If you signed any contract, be sure to review the contract thoroughly to see what legal rights you may have under the contract. You should also file a report with the FTC as well as your state’s attorney general’s office. You should be prepared to provide each of these agencies with:
- The name of the individual you dealt with (and the name of the company, if applicable);
- A copy of the contract and any documents you signed with the company;
- Detailed notes of any and all conversations you had with the individual or company, including the date and time of these conversations, who the conversation was with, and any statements the company made to you;
- Statements you received from any creditors regarding your debts with them; and
- Bank records or verification of any payments made to the company.
Usually, a debt relief company’s reputation will precede them. Reputable settlement companies should have a positive track record of helping distressed debtors solve their financial troubles. The dedicated team of debt settlement attorneys at Instant Settle Consultants, PLLC are concerned with one thing: your financial future. We offer debt settlement and debt relief programs to clients struggling to get back on their feet. Learn how we have helped others just like you obtain relief from their debts and start a new financial life. Contact us anytime, day or night, by calling our offices at (602) 313-1661.