If you know anything about the Obama administration, then you know that they are big on consumer rights. The president and his advisers have put in a number of laws designed to keep people from getting ripped off by either creditors or scamming settlement companies. There are plenty of really good companies in the debt settlement business, and the recent laws have been designed to weed out the good from the bad. These laws require a lot of settlement companies that claim they are helping consumers. The effect is that you can now use them with relative confidence instead of abject fear.
So what are these laws? Alongside the FTC, the president has forced settlement companies to cease the practice of collecting a fee up front from people who are in debt. This is a great idea, given the fact that consumers are often in a vulnerable position when they have debt. Instead of collecting the fee up front, these settlement companies can collect their fee after they have actually done something good for a consumer. After 30% or more of the debt liability is eliminated, they can charge customers for the service. This has chased the bad settlement firms out of the business and has left the industry with a bunch of reputable companies looking to help consumers.
Likewise, a new law has required settlement companies to carry the costs of negotiating for at least a little while. Rather than forcing people to go out of pocket for these expenses while they are also trying to make payments on debt, the government is putting the cost on the settlement company. These costs can be recouped later, but the settlement companies have to wait until the debt is taken care of. This protects customers from up front costs and gives them a better chance of actually getting out of settlement alive if they are working with a firm. As a consumer, this should make you feel better and it should give you a fighting chance if you plan on using settlement as a legitimate option.
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