If you decide to debt settle rather than file bankruptcy, you need to be aware of a loophole in the law.
You have probably heard that the Federal Trade Commission is finally implementing new rules to control the many non-profit debt settlement companies which take your money and do little or nothing to help you settle or reduce unsecured debt. As reported in the New York Times and appearing in the Omaha World-Herald on August 1, 2010, the new rules take effect in the fall of 2010 and prohibit these companies from charging a fee before they settle or reduce your debt, and requiring them to set up dedicated accounts for debt payments, disclose how long their debt reduction efforts will take, what they will cost, and the potentially negative consequences that could occur.
This all sounds good, but there is a huge loophole – the new rules only to apply to agreements struck as a result of telephone calls by debt relief companies, in response to advertisements. These rules do not cover any transactions that take place entirely online or as a result of a face-to-face meeting between a company representative and a consumer.
So beware of the non-profit debt settlement company that lures you onto their website to enter into an agreement. Better to do this the old-fashioned way, ask for a written agreement to be mailed directly to you for your review and signature. In doing so, you can avoid paying the company anything before they settle or reduce your unsecured debt.
If you have any questions, please contact Steffens Law Office.