Defend Your Dollars

Debt Relief

Having trouble paying your bills? You’re not alone. Many people are struggling with their finances. You may be tempted by ads from companies offering to settle your debts for 50 cents on the dollar, but beware – it could be a trap that will leave you further in debt.

Until recently debt settlement companies make big claims about how they can help you and then collect most or all the fee from you long before they have helped to eliminate your debts. You pay the fee whether your debts are settled or not. A new law bans this practice. Companies now have to earn their fee and actually settle your debt before you pay!

Here is the actual language of the new rule. (PDF)

Here is a summary explaining the new protections. (PDF)

If you’re having problems paying your bills read this tip sheet (PDF) and then contact a reputable nonprofit credit counselor by going to www.nfcc.org.

Publications

• Consumers Union and the National Consumer Law Center’s Model Debt Settlement Law for States
  Posted 01/25/11 at 2:46 pm

  Debt settlement services hold out the promise of settling debts for less than the full amount owed. To achieve the touted result of settling debts, however, the consumer first has to save enough to fund settlements of the debts. Multiple debts may be involved, and the process may be designed to take several years. While Continue Reading

• Support for Debt Settlement Consumer Protection Act of 2010
  Posted 09/24/10 at 10:16 am

  September 24, 2010 Re:   Support for S. 3264 and H.R. 5387 – Debt Settlement Consumer Protection Act of 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 Continue Reading

• FTC debt settlement rule summary
  Posted 09/16/10 at 11:18 am

  Under new regulations adopted by the Federal Trade Commission today, for-profit debt settlement companies will no longer be allowed to collect fees for their services until they have settled some or all of a consumer’s debt. The new regulations will help curb deceptive and abusive practices in debt relief services sold through telemarketing. The FTC’s Continue Reading

• Debt Settlement
  Posted 08/30/10 at 7:43 am

  Have you been ripped off by a debt settlement company?

• Debt Settlement
  Posted 08/11/10 at 10:52 am

  Don’t Get Caught in the Debt Settlement Trap

• What you need to Know about Debt Settlement Services
  Posted 01/05/10 at 3:03 pm

  Don’t Get Caught in the Debt Settlement Trap Having trouble paying your bills? You’re not alone. Many people are struggling with their finances. You may be tempted by ads from companies offering to settle your debts for 50 cents on the dollar, but beware – it could be a trap that will leave you further Continue Reading

Press Releases

• Advance fees for debt settlement will be prohibited
  Posted 10/21/10 at 10:23 am

  New protections go into effect starting October 27

• Debt settlement protections start for consumers
  Posted 09/27/10 at 11:08 am

  FTC’s new rules will help put an end to debt settlement rip-offs and make sure that consumers get treated

• FTC issues new debt settlement protections
  Posted 07/29/10 at 11:55 am

  New regulations bar advance fees and other debt settlement industry abuses but don’t cap fees

• Consumer groups support reform of debt settlement industry
  Posted 06/15/10 at 3:04 pm

  Consumer and privacy groups support Senate and House bills to curb debt settlement abuses

• Consumer groups offer debt-strapped consumers advice on getting real relief
  Posted 01/26/10 at 11:21 am

  Beware of debt settlement trap

Blog Posts

• Most Victims of Bank Wrongdoing Will Get $1000 or Less Under Settlement
  Posted 04/19/13 at 9:54 am

  Last week the Wall Street Journal reported some sobering news:  The vast majority of borrowers being compensated for mortgage related abuses will get $1,000 or less, under a $9.3 billion dollar settlement between the U.S. and banks. If that were not bad enough, yesterday the New York Times reported that homeowners trying to cash their Continue Reading

• Advance Fees For Debt Settlement Will Be Prohibited
  Posted 10/25/10 at 11:51 am

  On October 27th new rules go into place for debt settlement companies that will help consumers.

• Good News! Finally Reigning in Debt Settlement Companies
  Posted 08/06/10 at 11:41 am

  The past two weeks we’ve seen two big steps forward toward reigning in debt settlement companies.