Monday, June 21, 2010

Congress turns attention to debt settlement firms


... State attorneys general from New York to California and consumer watchdogs like the Better Business Bureau say the industry’s proceeds come at the direct expense of financially troubled Americans who are being fleeced of their last dollars with dubious promises.

Consumers rarely emerge from debt settlement programs with their credit card balances eliminated, these critics say, and many wind up worse off, with severely damaged credit, ceaseless threats from collection agents and lawsuits from creditors.

.. The Federal Trade Commission has proposed banning upfront fees, bringing vociferous lobbying from industry groups. The commission is expected to issue new rules this summer. Senator McCaskill has joined with fellow Democrat Charles E. Schumer of New York to sponsor a bill that would cap fees charged by debt settlement companies at 5 percent of the savings recouped by their customers.
http://www.nytimes.com/2010/06/19/business/economy/19debt.html?emc=eta1

MCRC's report on debt settlement explains how the practice almost always leaves consumers in worse shape than when they started. To read the full report or the executive summary, click here.

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