Debt settlement allows a consumer to pay off credit card debts and all unsecured debts at a reduced amount, based on their hardship and through our debt negotiation prog
Debt settlement allows a consumer to pay off credit card
debts and all unsecured
debts at a reduced amount,
based on their hardship and through our
debt negotiation prog
debt negotiation program.
Other services, like
debt consolidation which includes
negotiation with creditors, would be fee -
based, but only to cover the administrative costs of running the agency and its
programs.
The primary consumer protection problem areas that have given rise to the States» actions include: (1) unsubstantiated claims of consumer savings; (2) deceptive representations about the length of time necessary to complete a
debt relief
program; (3) misleading or failing to adequately inform consumers that they will be subject to continued collection efforts, including lawsuits, and that their account balances will increase due to extended nonpayment under the
program; (4) deceptive disparagement of consumer credit counseling; (5) deceptive disparagement of bankruptcy as an alternative for debtors; (6) lack of screening and analysis to determine suitability of
debt relief
programs for individual debtors; (7) the collection of substantial up - front fees so the
debt relief company gains even if it fails to perform; (8) lack of transparency and information for consumers as to payment of fees, status of accounts, and communications with creditors; (9) significant delays in active
negotiation or engagement with creditors, coupled with prohibitions on direct consumer communications with creditors; and (10), in the case of
debt settlement companies,
basing savings claims (and settlement fees) not on the original account balance, but on the inflated amount due (including late fees and default rates of interest) at the time of settlement.