The new rules force debt relief firms to be more honest. Geri Detweiler with the debt education website, Credit.com, explains how these companies now have to disclose information to you before you hire them. They include revealing how long the process would take, how much it would cost, and the negative impact of debt relief on their credit records. They’ll also be required to reveal their success rate over the last 2 years. Another rule that goes into affect on October 27th, is that they can’t charge a fee before a settlement is made with the creditors.
But David Leutholt with The Association of Settlement Companies says the ban on advanced fees will only hurt the businesses who want to do the right thing. He says they provide a lot of services to clients before a settlement is made, and they feel they should be compensated for it ahead of time. Leutholt also says successful clients will end up paying for those who bail before a settlement is made. But if you use a debt relief firm, Detweiller says to be sure the firms base their settlement plan on what the banks are actually settling for, and not just the idea that they can lower your debt. Click here for more information on the new rules. If you want to find a reputuable debt relief company click here.