The Federal Trade Commission has scheduled a workshop to examine the proliferation of debt settlement companies that promise debt relief but rarely help consumers improve their financial situation. The FTC wants to see what impact these for-profit companies have on debtors and on the businesses they owe money to.
On September 25, 2008 the FTC will host a workshop to discuss the problems that are occurring in the debt settlement industry. The workshop will be in their Satellite Building Conference Center at 601 New Jersey Avenue, NW in Washington, D.C.
The FTC has invited anyone with an opinion on the growing debt settlement industry to submit any relevant papers, surveys or research regarding for-profit debt settlement companies. Some people may be invited to serve as a panelist.
The result will likely shed light on the misrepresentation of such companies on the levels of service that they actually provide. Many promise substantial reductions in debt, but often cannot deliver what they promise.
In addition, there are many aspects of debt settlements that are not disclosed to the consumer. These negative consequences may include:
- adverse legal action
- negative credit reporting
- increased income tax liability
- heavy fees
- inability to settle on some accounts
- inability to receive a refund
It is expected that the FTC will use information from this session in order to evaluate whether current regulations on debt settlement companies are sufficient. This could result in further regulation to prevent unethical and deceitful business practices in the debt settlement industry.
1 response so far ↓
1 Dan // Oct 29, 2008 at 1:49 pm
Good information. Also lets let consumers know most debt management companies have no real lawyers retained or in house. Consumers should check up on companies by contacting their state attorney general’s office to make sure the claims that the debt management companies make are actually true.
Consumers, also check with your state banking division to make sure the company you choose to settle your debt with is legally registered in your state. Check and see if your state is a non profit state which simply means you can obtain the services of a registered company in your state for your donations.
Last and less important is BBB rating. why do I say this, because complaints with the BBB are easy to wipe out and most consumers do not even take it upon themselves to report bad business practices by debt management or settlement companies.
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