Although this change will reduce the amount of choice consumers have, it will help protect them from being victimized by unscrupulous companies who misrepresent their services and will help ensure that the debt settlement firms consumers do work with will help them and charge them fairly. In other words, consumers will no longer be 'sold' into debt settlement.
Austin, Texas (PRWEB) October 18, 2009
On November 4th, the Federal Trade Commission will hold an all-day public forum in Washington, DC on the rules it has proposed to reform the debt settlement industry. The rules are intended to curb the business practices of many companies in the industry that have been making money at the expense of consumers who are drowning in debt.
The FTC has invited Michael Bovee, founder and president of Consumer Recovery Network (http://www.consumerrecoverynetwork.com), a consumer education and debt settlement firm, and an outspoken critic of many in the settlement industry, to participate in its forum as a panelist. Bovee has already submitted written comments to the FTC supporting its proposed rules and commenting on their likely impact on both the debt settlement industry and consumers.
Bovee applauds the proposed reforms explaining, "The FTC's proposed rules will help clean up the industry and protect consumers desperate to find a solution to their debt problems from firms that are more interested in profiting off of their problems than helping them. If adopted, the rules will represent a significant and very welcome step forward and will do a lot to stop abuse within the industry." He also notes that the reforms will have little effect on members of his industry that are already operating in an ethical manner.
According to Bovee, several aspects of the proposed rules are especially important. They include:
- Debt settlement firms will be required to make specific up-front disclosures to consumers before they accept any money from consumers or perform any work on their behalf. The required disclosures include:
- the amount a consumer can expect to save by settling a debt
- that a consumer may be sued by a creditor during the debt settlement process
- the tax implications of settling a debt
- that creditors are not required to agree to a settlement
- how settling a debt will affect a consumer's credit history
- the success rate of the debt settlement firm a consumer contacts
Bovee believes that having this information up-front will make it easier for consumers to evaluate all of their debt management options * participate in a debt management plan, file for bankruptcy, or settle their debts -- and make an informed choice based on what's best for them given their particular circumstances.
- A significant number of the sales centers (stand-alone call centers and telemarketers) currently generating leads for a large percentage of debt settlement firms will be weeded out. Individuals working for such centers are salespeople who are motivated by the commissions they stand to make, not by a desire to help debt-stressed consumers. As a result, many consumers are steered into settlement when it is not the right option for them. "The proposed rules will make the sales-oriented business model financially untenable for most debt settlement firms," says Bovee. "Although this change will reduce the amount of choice consumers have, it will help protect them from being victimized by unscrupulous companies who misrepresent their services and will help ensure that the debt settlement firms consumers do work with will help them and charge them fairly. In other words, consumers will no longer be 'sold' into debt settlement."
- Consumers will have a much greater chance of succeeding in the debt settlement process. This is because more of their money will go toward funding their creditors' settlement offers rather than toward paying the high up-front fees that that so many settlement firms currently demand.