Debt relief programs are widely used after the onset of recession and after America faced the serious mortgage crisis which was caused by the recession back in the year 2007. Though the Obama administration came up with a number of strategies which were all aimed at helping the consumers to move out of the debt, only a few of them actually proved to work. However, for those who had unsecured debts, nothing seemed to work well and most of the people actually filed for bankruptcy. The method of debt settlement relief did come to rescue but a small glitch that popped in was the growth of fraud companies which cheated the consumers.
These fraud companies made false promises to attract the consumers and then collected huge mounts of money from them in form of upfront fees for the service that they would provide. Once the consumers paid the money, they turned their back on them and after a few months they informed the debtors that the creditors did not agree for any settlement deals. It is because of this reason that the consumers lost their faith on the settlement industry as a whole and they shifted back to bankruptcy filing! It is because of this reason that the Federal Trade Commission came up with new laws so that the interest of the consumers can be protected and so that the fraud companies can be eliminated from the industry.
According to this new FTC law, the settlement companies will not be able to ask for upfront fees from the consumers. Only when the companies successfully eliminate the debts of the consumers by the promised amount, they can ask for the fees. This means that the companies are now required to wait for 1-3 years (which is a typical time frame for debt settlement to be concluded) before they can claim money. This will be a harsh blow on the fraud companies and they will be forced to leave the market leaving behind only the legit companies who can genuinely help the consumers. This way, not only people can eliminate their debts using debt settlement relief but also they can make considerable savings. This is how the new laws change the debt settlement process.
Posted in Debt Relief | 
Tags: 3 Years, Creditors, Federal Trade Commission, Harsh Blow, New Laws, Recession, Settlement Companies, Time Frame