Debt Settlement Companies Ignore Federal Law
Debt settlement companies offer the help that the average American needs, help with their debt. They seem to be a decent program. You pay a small fee and they help you eliminate your debt. The only problem is that millions of dollars later these so called debt settlement companies have helped an extremely small number of people.
Using a debt settlement company is not a free service. Many people do not realize the large amount of fees that are associated with using one of these companies. Those are fees that are paid to the company and not used whatsoever to pay down any of the debt. Debt settlement companies also have no problem in allowing you to believe that they are able to make certain things happen that they could not possibly deliver.
Federal Fair Debt Collection Practices Act (FDCPA) has put much more strict rules on how a debt settlement company is able to conduct business. This has actually been the downfall to many of the debt settlement companies. They would have had you believe that they were in the position to make agreements with credit card companies when they really were not. The new Act has made sure that in order for the debt settlement company to operate legally they have to follow the new rules.
Debt settlement companies used to be able to make a lot of money fast with little effort, but the new act has eliminated all of that. The company is now limited in the amount of money in fees that they are actually allowed to charge the consumer. They are also no longer allowed to collect these fees upfront, but are required to actually work for the money. Since the majority of debt settlement companies were not actually prepared to settle the accounts this has put a lot of them out of business quickly.
Not to be denied, some debt settlement companies are trying to get around the new Federal amendment, and the new FTC rules and regulations. The thrust of their efforts is to set up a new business model that would presumable limit their operations to intrastate (within a state) rather than interstate (more than one state). The Federal government has no jurisdiction over purely intrastate activities.
Because of the expansive nature of the US Supreme Court definition of interstate activities, this exercise by the debt settlement companies will be futile. The unfortunate reality for the American consumer is, however, that it may take many, many months for courts to make a legal determination as the correct legal status of a particular debt settlement company. During this time the debt settlement companies will keep operating outside the restrictions of the new amendment and the new rules and regulations. They will flourish while consumers continue to be abused.
There have been recent reports that some debt settlement companies, in an effort to place themselves beyond the jurisdiction of the United States government, thus negating any application of the new FDCPA amendment and the new FTC rules and regulations, are moving their operations off-shore. They are using the on-line betting industry as a model.
ABOUT THE AUTHOR: Melvin Singleterry
Melvin R. Singleterry is a licensed practicing attorney, former Judge and former elected District Attorney, specializing in credit card debt negotiation and debt relief, owner and manager of Associated Attorneys, LLC.
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Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.