Debt Settlement Produces Greater Welfare Than Credit Counseling - Franklin Debt Relief's Research Paper to FTC

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Franklin Debt Relief's CEO, Robert Zangrilli, submitted a 50 page research paper articulating the benefits of debt settlement for consumers and why advance fee ban regulation stands to harm consumers significantly. One of the key findings is that the debt relief option championed by many consumer advocates, non-profit credit counseling, in aggregate produces a negative outcome for consumers, which is not true of debt settlement.

As the debt settlement industry facing increasing scrutiny from government authorities, Franklin Debt Relief hopes that its groundbreaking report on the overall consumer welfare produced by debt settlement will shed some light on the potentially catastrophic effects of ill-conceived regulation aimed at how the industry charges fees. The report, titled "Common Sense" (, provides a number of key insights for regulators such as the FTC to consider before it passes a rule that will in all likelihood severely limit the number of consumers who are allowed to obtain debt relief. Key among these insights is the finding that the overall financial benefit received by consumers who use debt settlement services is positive, which cannot be said of the debt relief option championed by many consumer protection advocates - non-profit credit counseling.

"What I looked at was how much money consumers who never complete their programs are losing from making non-refundable payments to debt settlement companies and credit counselors," Franklin Debt Relief ( CEO, Robert Zangrilli, said. "Then I compared this to the dollar savings realized by those consumers who do complete their programs. We were shocked that consumers probably lose more money in credit counseling than in savings realized."

In a time of financial distress for many Americans, the report concludes that an advance fee ban or contingency fee mandate will limit the number who can benefit from debt settlement services and force more consumers to enroll in debt management plans (DMPs), where typically they will lose $5,000 in non-refundable payments to credit card companies when they would have been better off trying to settle their debts or filing bankruptcy immediately.

"It is scary stuff what kind of collateral damage this will have for consumers if passed. It is time consumer protection groups understand that bad companies that harm consumers must be defeated by not only regulation but also good companies in the free market. Unfortunately, I'm not sure these groups understand how useful debt settlement is for consumers. Hopefully this report will help articulate this benefit."    

Franklin Debt Relief is a leading debt settlement company and backend processing service ( based in Chicago, Illinois.


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Robert Zangrilli
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