Debt Relief Firms Under Scrutiny
Of late, many debt relief firms especially debt consolidation and debt settlement companies have come under scrutiny. Many debtors have questioned the manner in which they operate. The fees charged by these debt relief companies have raised eyebrows. The number of dropouts is not uncommon when debtors enroll for one of the debt help programs offered by companies in the debt help industry.
One of the main complaints against the debt relief companies is that these companies take their fees before they are able to deliver their services. This is very disturbing and there are many debtors who spend their savings on these debt help companies with the hope that they will make them debt free. The debt consolidation and the debt settlement companies usually charge very high upfront fees.
Not that all the debt relief companies are not able to deliver their services. But majority of them take their fees while the initial contract is signed between the debtor and the debt help company whose services are being hired.
In response to the innumerable complaints received by the state regulators, attorney generals and the Federal Trade Commission, bill AB350 aims at regulating the debt settlement companies in California. One of the most important changes that this bill is expected to bring is the upfront fees charged by the debt settlement companies. Henceforth, the debt settlement companies will be able to take fees after a reasonable time has elapsed for the debt relief program that the debtor has enrolled for.
What are the various forms of debt relief?
Debt relief can be in various forms. It can be debt consolidation, debt settlement, debt management, credit counseling or just bankruptcy. The different debt relief options may not benefit all debtors equally. It depends on the financial condition of the individual debtors. And if debt settlement is suitable for one debtor, it may not be the best debt help solution for someone else.
However, bankruptcy is a debt solution not many debtors willingly opt for. It is usually regarded as the last resort as it destroys credit rating of debtors. A debtor has to face a difficult time ahead if he files bankruptcy as far as enjoying credit on favorable terms are concerned.
There are many employers that are reluctant to recruit candidates that have bankruptcy filing in their credit report. Insurance carriers refuse to sell insurance policies at good rates to people who are bankrupt.
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- Aug 11, 2009: Debt Relief Firms Under Scrutiny « Debt Relief
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A debt management plan is one option for breaking free of unsecured debts. You would work with a third party who would get in touch with your creditors and work out a plan for you to pay back the money you owed over a period of time, usually with reduced payments. Once you have gone into the deal creditors will not be on your back for payments and if you stick with the plan you will have become debt free once the term of the plan has been reached.
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