New York, NY (PRWEB) September 15, 2010
Hamilton Debt Relief, a New York City based debt settlement company, has announced its intention to comply with the new FTC rules regarding debt management that become effective September 27, 2010. The most controversial of the new rules is an advance fee ban for debt relief services, and surveys from The Association of Settlement Companies (TASC) and United States Organization for Bankruptcy Alternatives (USOBA) estimate that between 50-80% of all debt settlement companies will stop operating when the rule goes into effect.
Before the FTC adopted the rule banning up front fees for debt relief programs, the typical fee charged to a consumer who used these services was 15% of the debt enrolled into a settlement plan, and it was paid over the first 12 to 18 months of the program, oftentimes with the first three or four payments going entirely to the fee to the company. This practice lead to many abuses within the industry, consumers often being left with larger debts than when they enrolled into a service despite having paid thousands of dollars in fees to the debt management firm. With complaints mounting during the current recession, the debt settlement industry received increasing scrutiny from the media and regulators, culminating in the recent decision by the FTC to ban up front fees.
The key now is that debt relief companies must now save consumers money before they are allowed to collect any fees. Ultimately, the FTC and regulators believe this type of compensation will ensure that only companies who are delivering results to consumers will be able to continue operating, making debt settlement a much safer and effective option for consumers. Hamilton Debt Relief announced its intention to charge a fee of 25% of the savings a consumer realizes from their plan, making their fee structure one of the most competitive in the industry.