Educational Consumer Tips
Better Business Bureau
Better Business Bureau advises that consumers looking for help with credit card debt should be wary of anyone who tells them to stop paying their bills, to pay someone other than their creditors or to stop talking to their creditors. Complaints filed with the BBB on debt relief companies are concerning misrepresentation, unsatisfactory service, and difficulties with refunds.
The Federal Trade Commission (FTC) announced changes to the Telemarketing Sales Rule that prohibit companies that sell debt relief services over the telephone from charging fees before they settle or reduce a customers' credit card or other unsecured debt. This ban on advance fees protects all consumers who enroll in a debt relief service after October 27, 2010, and specifies that fees for debt relief services may not be collected until:
* the debt relief service successfully settles or changes the terms of at least one of the consumer's debts;
* there is a settlement agreement, debt management plan, or other agreement between the consumer and the creditor that the consumers has agreed to; and
* the consumer has made at least one payment to the creditor as a result of the agreement negotiated by the debt relief provider.
The FTC rule also calls for companies that sell debt relief services over the telephone to disclose the fees and terms, including how long until the company makes an offer to each creditor; how much you must save before an offer is made to a creditor; and the possible negative consequences of stopping payments to creditors. The FTC warns consumers to avoid doing business with any company that promises to settle your debt if the company:
* charges any fees before it settles your debts* touts a "new government program" to bail out personal credit card debt
* guarantees it can make your unsecured debt go away
* tells you to stop communicating with your creditors
* tells you it can stop all debt collection calls and lawsuits
* guarantees that your unsecured debts can be paid off for just pennies on the dollar