Monday, March 14, 2011

Senate Debt Settlement Working Group TODAY

Today, MCRC joins a Senate work group meeting on debt settlement-Senate Bill 741. MCRC is advocating for a 15% fee cap on the amount firms can charge cash-strapped consumers. Between April-December 2010, the Attorney General's office received 88 new complaints from Marylanders who had lost $112,000 to unscrupulous debt settlement firms. Of these 88 complaints, 64% of victims were women and many were retired or nearing retirement age.

Currently, the legislation calls for a 30% fee cap. MCRC believes this fee is far to high. Individuals turn to debt settlement companies when they have nowhere else to turn. Recent research from the Center for Responsible Lending shows that fees need to be set below 20% for a consumer to break even IF the majority of their debts are settled. While debt settlement firms need to generate profits, testimony and reports from The Association of Settlement Companies (TASC) and Debt Shield state that many of these costs are in acquiring customers. MCRC believes these costs could be reduced without diminishing their services. TASC is asking that fees are not capped at all and that each debt settlement firm can determine its own fees.

If you think fees should be lower, call or email your Senator today. Ask them to amend the bill to cap fees at 15%. Email marceline@marylandconsumers.org for more information.

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