Debt settlement companies often promise desperate consumers they can reduce their credit card debt, but charge a large upfront fee, reports the ConsumerAffairs.com article “New Debt Consolidation Rules Take Effect Soon.” Little or no effort is made to settle the debt and consumers are left in worse shape than before.
Phase 1 changes will focus on how debt consolidation is marketed to consumers.
Phase 2, which takes Oct. 28, will restrict debt relief companies from charging any fees until the consumer has received either interest rate or principal reductions from their creditors.
The new rules are designed to provide to support to a number of states that have been battling predatory debt settlement firms.
Click on the article above for details on the new debt consolidation rules.
See the FTC’s “Knee Deep in Debt” for information on credit counseling, debt consolidation, and managing your debts.