Friday, September 24, 2010

MCRC signs on to letter suppoting debt-settlement reform

Sept. 24, 2010

Dear Senator/Representative:

Our organizations, representing millions of consumers across the United States, strongly support the Debt Settlement Consumer Protection Act of 2010 -- S. 3264, sponsored by Senator Charles Schumer; and H.R. 5387 sponsored by Representative Luis Gutierrez. We ask you to cosponsor this important legislation to protect Americans from harmful debt settlement industry practices, and to support it.

It is crucial to enact this legislation as soon as possible to protect vulnerable consumers from the effects of harmful debt settlement practices.

The debt settlement industry claims that it will help consumers negotiate with creditors to pay off debts for less than the amount owed. Debt settlement providers encourage consumers to stop paying their creditors and instead accumulate money in a special account to fund later settlements. However, debt settlement companies generally deduct fees directly from those savings before any debts are settled, and keep taking fees every month, even if they never settle one penny of the consumer’s debt. Since creditors are not getting paid, they may increase collection activity and even sue.

To download the entire letter, click here.

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