The United States Organizations for Bankruptcy Alternatives (USOBA) Applauds Efforts to Protect Consumers

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In response to the report Â?An Investigation of Debt Settlement Companies: An Unsettling Business for ConsumersÂ? by the National Consumer Law Center (NCLC), the United States Organizations for Bankruptcy Alternatives (USOBA) agrees that consumers must be protected from Â?badÂ? debt settlement firms.

In response to the report “An Investigation of Debt Settlement Companies: An Unsettling Business for Consumers” by the National Consumer Law Center (NCLC), the United States Organizations for Bankruptcy Alternatives (USOBA) agrees that consumers must be protected from “bad” debt settlement firms.

Since its inception only 8 months ago, USOBA has held several open committee meetings to draft association standards that can be implemented by the industry. The meetings have been attended by state regulators in addition to industry members.

USOBA has produced a guide for the industry to the various state laws. USOBA has also sent letters to state regulators asking about the applicability of the law to the industry in order to help debt settlement firms comply with the various state laws.

The USOBA Winter Conference in November last year had an impressive list of speakers that included state regulators, a representative of the Federal Trade Commission (FTC), a representative of the U.S. Department of Justice and Congressional staff.

USOBA is a participant in the National Conference of Commissioners on Uniform State Laws (NCCUSL) drafting committee for the “Uniform Consumer Debt Counseling Act”. Contrary to the NCLC’s representations of working with the NCCUSL committee, the NCLC formally withdrew from the proceedings and is not a participant in drafting this important consumer protection legislation.

Rather than avoiding regulation, USOBA is demanding legislation to regulate the industry. “No one wants to see consumers taken advantage of. There are bad actors in this industry, as with any industry. For example, those who have recently settled with the FTC and their actions make it more difficult for good companies to perform legitimate services for consumers”, said USOBA Executive Director Kallie Guimond.

Guimond added, “The NCLC report is trying to create a firestorm about the industry hiding its activities. In reality, the NCLC author could have learned a lot more about the industry by disclosing her intentions of authoring a report. It is true that the NCLC did send a letter on March 8th asking for information about the industry. As it turns out, on that exact date, many industry representatives and several state regulators were at a USOBA meeting that was open to the public to craft standards and regulation that would protect consumers and help clean up the industry. The USOBA regrets that the NCLC failed to take this very real opportunity to work with our organization to help protect consumers.”

Guimond, currently on medical leave following treatment for cancer and a March 16th surgery, says that this is not an issue of negotiation companies being vague or dishonest about their practices, but an issue of timing and patience on the part of the NCLC. “It is difficult to find companies in this industry who are unwilling to talk about the services they offer or their business models. In February, we met with the BBB of the Southland (Los Angeles, CA), and regulators and legislators from Florida, Maryland and New York to discuss any industry practices they found unappealing. Together we discussed how USOBA, as an association, could work to make the industry a better place. We assumed the NCLC wanted honest answers to their three-page questionnaire with real data to back that up. That requires time. We did everything we could before my medical leave and put the rest of the projects in the hands of the USOBA staff to do the research until my return. We never ignored or refused any request, we just apparently did not get back to them in time. Outside of the 2 letters allegedly sent on February 8th and March 8th, there was no communication from their office…not one phone call specifying when they needed their information. So their assertion that we “ignored” them is wrongly based on assumption, and their statement that we “refused” to work with them is blatantly false.”

Guimond finishes by saying that the USOBA is in 100% agreement with the NCLC with regards to problems in the industry, but not about the solutions. “The NCLC seems to be proponents of shutting this industry down. We don’t see displacing tens of thousands of consumers, who are happy with their negotiation providers and the programs that they’re in, as an option. We would like to see the industry regulated specifically for their business, and are happy to see that many of the states we are working with are beginning to study debt negotiation and settlement for the purpose of writing new laws to deal with them directly. They finally see that comparing negotiation and credit counseling is similar to comparing apples to oranges, and therefore the laws that govern one portion of the industry is unfit to govern the other.”

The NCLC is invited to participate in the USOBA standards drafting process, has been invited to attend our convention and to be a speaker at the USOBA conference. In fact, Deanne Loonin, the author of the NCLC’s report, was forwarded an invitation to speak at the USOBA’s Spring Conference in New Orleans on May 24 – 26 alongside regulators and legislators from several states and have the opportunity to meet with more than 100 companies from the industry who would be more than forthcoming with the information that NCLC is seeking. Loonin has as yet failed to provide a response, but the USOBA is hopeful that the NCLC will not overlook future opportunities to work with the industry for the development of standards and legislation that are consumer protective.

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Kallie Guimond
USOBA
202-232-6500
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