Consumers desperate attempt to salvage their credit can end up at the reigns of unscrupulous "credit repair" predators. Take caution and heed to the theory that if it sounds to good to be true....
When asked by a customer about debt relief counseling or services, I always take the time to thoroughly examine and determine exactly what the nature of the person's debt is ... and how severe. Many lenders will do the same, and proceed in assisting those customers that they feel equipped to counsel and assist at no cost to the customer.
I do this to help straighten out debt and benefit credit scores for present customers, and those considering buying in the future or refinancing present loans. I consider it just another way I can benefit my customers and also see it as extension of my personal lending services. When I feel the debt or circumstances are beyond me, I say so and help in finding someone that is best equipped to handle the more critical stages of debt. I will point out, that there are some companies that are more reputable and better capable of offering that assistance. Obtaining THOSE contacts are key to the success of debt elimination.
Big changes came to those companies found within the debt settlement industry yesterday. The Federal Trade Commission placed new restrictions on companies that promise to help consumers pay-down or eliminate their credit card balances and late fees.
These new changes will apply to all debt relief companies selling their services over the phone ... not to those that make first contact in-person or conduct business entirely online. These rulings are much more wide-spread than it would initially appear, as the large percentage of debt settlement companies utilize radio and television marketing to promote their toll-free numbers. That means they are included under these new restrictions.
It's been reported by the Better Business Bureau that over 3,500 complaints have been received regarding these debt settlement companies since the recent recession began. Complaints contained out-and-out fraudulent activities and stories of debt actually accumulating higher as a result of working with these companies. While utilizing these companies services, many customers quit making their payments, which resulted in further debt, additional interest charges, and late fees being assessed. This only exacerbated their credit problems.
Perhaps the best change contained within these new rulings by the Federal Trade Commission, will be that these companies can no longer charge their customers an "up-front" fee for services.
Starting on October 27th, 2010, debt settlement companies will only be able to charge their fees AFTER a customer's debt has already been settled, renegotiated ... or at minimum, seen a reduction. Many companies were charging a percentage of the outstanding balance as their company's service fee. For their fee, they were promising to negotiate for reduction or elimination of debts with the customer's creditors.
Some debt settlement companies also demanded that monies be placed aside in accounts. Of course, the settlement company had control over the accounts. This has been ruled out as a result of the new restrictions. From now on, any accounts maintained must be through independent financial institutions and in the customer's name(s). The customer will retain the ability to withdraw the monies at any time ... and free of penalty.
Strict penalties ($16,000 per violation) will apply to for-profit companies that do not abide by these newer, more restrictive rules. Non-profit agencies or companies do not fall under these penalty rulings.
I suggest strongly that you contact me or your own lender, should you wish a credit/debt evaluation ... or recommendation for a debt settlement company. Take the time to thoroughly know and understand what you are facing. Educate yourself to your options and how best to proceed. With the new restrictions going into place on October 27th, you will be better protected and better served if your decision then ultimately includes the services of a debt settlement company.
Charita Cadenhead, Your Metropolitan Birmingham, Alabama Real Estate Broker of Choice
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Charita H. Cadenhead, Realtor®
Keller Williams Realty Metro North
Gardendale, AL 35071
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