Falling behind in debt is stressful and can financially ruin your and your family’s future. Numerous companies advertise, or otherwise solicit, that they can help you with your debt and reach settlements with your creditors. You need to know your rights and do your homework.
Before contracting with you, Federal law requires that debt relief service companies inform you: 1) how much their services will cost and about any important terms, including the terms of any refund policy; 2) how long before you may receive a debt reduction; 3) how much you may save using their services; 4) how you may be affected if you stop paying the debt; and 5) your rights to any funds set aside by you, including interest that accumulates from those funds. Also, debt relief service companies may not charge a fee until they reduce or resolve your debt. Federal and state law protects you against unscrupulous debt relief service companies that take advantage of your precarious position, overinflate their prior successes or misrepresent or omit important consumer information.
Before hiring any debt relief service company, you should contact your state’s Attorney General, Consumer Affairs Division and/or Better Business Bureau. Ask whether any prior customers or consumers have lodged any complaints against the debt relief service company, what were the complaints, whether the government took action against the debt relief service company and the results of any complaint or action. Also, look on the Internet and read what other consumers have written about the debt relief service company, both positive and negative. The Federal Trade Commission also cautions that you should avoid a debt relief service company that, among other things:
1) charges fees before it settles any debt;
2) recommends or requires you to make “voluntary contributions”;
3) advertises government consumer debt bail out programs;
4) recommends that you stop paying your debt, but does not tell you the consequences, including credit damages and possible legal action or repossession;
5) promises to resolve all debt and lawsuits;
6) guarantees that your debt will be significantly reduced;
7) refuses to send information on its services in writing before you enter into an agreement or provide personal financial information;
8) attempts to enroll you in debt relief program or a debt management plan without reviewing your personal information or teaching you financial management skills; and
9) requires that you transfer funds into a plan before your creditors accept you into a program[1].
If you believe you are the victim of a debt relief service company, contact the Keefe Law Firm for a free and confidential consultation.
Written by Stephen Sullivan
[1] See Federal Trade Commission, Coping with Debt, at www.consumer.ftc.gov/articles/0150-coping-debt.