New Yorkers in search of debt relief often seek out debt settlement companies. As I’ve mentioned in previous posts, debt settlement companies should really be avoided and are not to be trusted.
That said, the Federal Trade Commission (FTC) recently issued new rules intended to protect consumers from debt settlement companies. So in the event you’re still inclined to “get quick debt relieft” from a debt settlement agency, here are some things to know about the new rules:
1. No up-front fees: It’s never a good idea to pay an up-front fee to a debt settlement or debt relief agency. The new rules now make it illegal for them to require payment up front. In fact, they cannot request payment until they have worked out an agreement with your creditors, shown you the agreement (i.e., in writing) and received your signoff to go ahead and execute the agreements on your behalf. Only then can they ask you for a payment.
2. Only applies if it’s a phone call: That’s right, the new rules only apply if this is done over the phone. If a representative from a debt settlement company meets you in person–your home, their office, a coffee shop, wherever–the “no up-front fees” rule does not apply. Why? Because the FTC is only authorized to regulate phone calls and uses that authority to regulate what debt settlement agencies can do and say when using the phone. But they don’t have jurisdiction over in-person contact. So if you do talk on the phone with a debt settlement representative, you can likely expect a follow-up visit or meeting.
3. Beware of phony law firms: These new FTC rules don’t affect lawyers, since lawyers meet with clients in person. (Or at least decent, experienced and qualified lawyers do.) As a result, there have been some incidents of debt settlement companies setting themselves up as a law practice as a front for their debt settlement work. For example, a Florida-based “law firm” called the Consumer Law Group ran a classic “advanced fee scam” that took advantage of hundreds of people in North Carolina and was eventually nailed by the North Carolina State Attorney General.
The best way to protect yourself in these situations is, of course, to avoid debt settlement companies, period.
(CLICK HERE to learn more about debt forgiveness, tax implications and 1099s.)
If you are in need of New York debt relief, please feel free to contact me for a free initial consultation. I’ve been helping people for years to deal with their New York debt and bankruptcy problems, and I can help you figure out all of your options and determine the best strategy moving forward.
Contact Bruce Weiner, Esq.
EMAIL Bruce Weiner
Phone
(718) 855-6840 (Local)
(866) 402-8476 (Toll Free)
Fax (718) 625-1966
Go to fair debt collection practices act to learn more about Rosenberg Musso & Weiner LLP and/or to set up a free consultation.
