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Educational Consumer Tips

Debt Relief Services

Author: Better Business Bureau


Better Business Bureau suggests that before entering into a debt relief service agreement, you should exercise caution and carefully consider all of your options.


According to the FTC a Debt Relief Service company is defined as “ a program that claims directly, or implies, that it can renegotiate, settle, or in some way change the terms of a person’s debt to an unsecured creditor or debt collector. That includes reducing the balance, interest rates or fees a person owes.”  Debt settlements may lead to charge-offs or other actions that can reflect on your credit report. Determine just how this type of service will affect you and your credit.


The Federal Trade Commission (FTC) recently announced changes to the Telemarketing Sales Rule (TSR).  For-profit debt settlement businesses that solicit consumers over the telephone are prohibited from charging a fee before they settle or reduce a consumer’s unsecured debt.  Additionally, the Telemarketing Sales Rule calls for Debt Relief companies to disclose the fees and terms, including how long until the company makes an offer to each creditor; how much you need to save before an offer is made to a creditor; and the possible negative consequences of stopping payments to creditors. The ban on advance fees protects consumers who enrolled in a debt relief service after October 27, 2010, and the TSR rule states that fees for debt relief services may not be collected until:


  • “The debt relief service successfully re-negotiates, settles, reduces, or otherwise changes the terms of at least one of the consumer’s debts;
  • There is a written settlement agreement, debt management plan, or other agreement between the consumer and the creditor, and the consumer has agreed to it; and
  • The consumer has made at least one payment to the creditor as a result of the agreement negotiated by the debt relief provider.”

BBB cautions consumers to avoid doing business with any company that:


  • Advises you to stop communicating with your creditors.
  • Tells you it can stop all debt collection calls and lawsuits.
  • Charges advanced fees.

    For additional tips on handling credit and debt, you may wish to contact the FTC at 877-382-4357 or