The Federal Trade Commission has recently backed a new law that will make debt settlement more legitimate. It will prevent debt settlement companies from asking for fees upfront, but rather allowing them to charge clients when negotiations have been completed and the debt is settled. In this way debtors will know exactly what they are being charged for and the consumer avoids fraudulent cases that could ruin them financially.
In the past customers who have chosen debt settlement had soon realized just how difficult of a process it can become, and wished that they had chosen bankruptcy instead. However, bankruptcy is bad for both the consumer, who does not recoup his losses, and the debtor, whose credit score is hurt.
This new law will help eliminate small debt collection companies who make the bulk of their profits from upfront fees, as well as scam companies and those online that don't offer valid services. Instead, negotiations will be made between the debtor and creditor, in which the creditor knows exactly how much to pay and on what time schedule.
The FTC hopes that this will reinvigorate trust in lending institutions as debtors work to make settlements with them. In this way consumers can reduce their debts by 50 percent on average and, if the company does not help them settle their debts, the consumers do not have to pay any money to them.
Have questions about debt relief? Contact us to work with a San Antonio bankruptcy attorney!