There are many good debt settlement companies who are helping tens of thousands of consumers resolve their debt when no other help is available
Madison, Wis. (PRWEB) April 15, 2010
The Association of Settlement Companies (TASC), the debt settlement industry’s largest trade group, today responded to misstatements and inaccurate information released by Illinois Attorney General Lisa Madigan and the Chicago Sun-Times.
“There are many good debt settlement companies who are helping tens of thousands of consumers resolve their debt when no other help is available,” David Leuthold, executive director of TASC, said. “Characterizing the entire industry negatively is wrong and only misleads consumers in the end.”
TASC is correcting the following statements made either by Madigan and/or that appeared in a April 12, 2010 article in the Sun-Times:
Misstatement: Labeling debt settlement companies as “scam artists.”
Fact: In 2009, TASC members alone settled more than $1 billion in debt. Consumers paid approximately $400 million to creditors to resolve that debt owed, saving approximately $600 million, thus showing the efficacy of debt settlement.
Misstatement: Companies charge “large up-front fees … (of) 15-20 percent” of the debt before a single debt is settled.
Fact: TASC limits the fees that can be taken in the early part of the program and supports fees that are spread out over time, typically 18 months or longer and average only around 6-7 percent per year.
Misstatement: “Approximately 65 percent of people who sign up drop out before any of their debts are settled” and only “1-3 percent of people who sign up have all their debt settled.”
Fact: TASC statistics show that approximately 35 percent of people finish the entire program, a rate higher than Chapter 13 bankruptcy and significantly higher than debt management plans offered by non-profit credit counseling companies.
Misstatement: Madigan’s bill “doesn’t outlaw debt (settlement).”
Fact: The permitted fees for performing debt settlement under this bill would not cover the costs of the service and effectively bans debt settlement. Meanwhile, non-profit credit counseling companies can charge fees of up to 300 percent more than that permitted for debt settlement companies under the bill.
Misstatement: Consumers should turn to credit counseling instead of debt settlement.
Fact: Many consumers cannot afford credit counseling since the service only reduces the interest rate and not the principal amount owed.
Fact: Debt settlement is an additional option, not a replacement for other debt relief help.
“TASC supports the open and honest disclosure to consumers of both the risks and benefits of debt settlement programs,” Leuthold said. “We wish the press and the Illinois Attorney General would do the same.”
About The Association of Settlement Companies
The Association of Settlement Companies (TASC) promotes fair business practices, consumer protection and industry standards for the debt settlement industry. TASC, founded in 2005, serves to protect consumers through an organization seal that represents best practices and standards of reputable companies. The organization also protects its member companies through lobbying efforts at the state and national levels, as well as awareness initiatives to educate consumers on debt settlement as a financial solution. All TASC member companies pledge compliance to strict association bylaws governing business practices and ethics. For more information, visit http://www.tascsite.org.