FTC Debt Settlement Rules Safeguard Consumers From Malpractices

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Debt issues have become a regular feature in the US. People have been struggling to pay off debt. The poorly performing economy has inflicted a negative effect on their livelihoods, which has made things even worse. The past few years have seen a rise in the number of debt settlement companies offering debt relief to the needy lot. Their solutions promised an easy and faster way out of debt. Unfortunately, things weren’t working out as they were meant to. A majority of the debt settlement companies were reported to be hiding the nature of their plans and proposals from their clients. This led to the formation and implementation of some ground rules by the Federal Trade Commission (FTC) in order to rein in the illegal and dangerous practices adopted by these companies in the name of service to the debt-ridden masses.

People have been complaining about debt settlement companies not fulfilling their promises. They had their faith in these companies, but didn’t find the assistance necessary to reduce debt and avoid bankruptcy filings. They paid a healthy sum of money to these companies, but could buy nothing but the blank assurance of faster debt relief. As if this wasn’t enough, they found working with the debt settlement companies to be harmful to their credit scores. Their credit history reflected negatively, which was a strong blow to their financial future.

Although debtors received suggestions against resorting to debt settlement companies, they continued to seek help from them. Quite obviously, the damaging consequences were for them to bear. Debtors would have saved themselves thousands of dollars had they filed for bankruptcy. Frustrated with their situations, debtors lodged a series of complaints against the debt settlement companies to the Better Business Bureau (BBB) and the FTC. This pushed up the number of complaints by 18 percent between the years 2008 and 2009.

Rescue efforts by the FTC for consumers

The FTC laid out new rules that will make the debt settlement companies show honesty with their proposals to customers. The following are the restrictions imposed on the debt settlement companies:

No more lies – The companies can’t lie to their customers about anything in any way. They have to provide the debt solutions if that’s what they promise to do.

Transparency in costs – Customers are to be provided with written documents stating the estimate of the expenditures involved.

Specific timeframe – The companies must state the timeframe within which the customers could get rid of or see reduction in debt.

Negative effects on FICO or credit scores – Consumers should be informed about anything that could inflict negativity in their credit report and reduce debt.

Aside from the aforesaid rules, consumers have been equipped with the right to stop paying the debt settlement companies till they get to see the desired results. Consumers have been misled by debt consultants. In their attempt to avoid filing for bankruptcy, they end up in higher debts. This also causes a downslide in their credit scores.

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10 Things You Should Officially Never Pay For

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Certain companies try to make money off the ignorance of the public, charging for things that are normally free. Read on to discover which things you should never pay for.

Debt Advice

Don’t pay debt consolidation companies or any other outfit that seeks to earn money off of your misery. You can get debt advice for free from your local Citizen’s Advice Bureau, and there are plenty of charities that exist for the sole purpose of getting people out of debt for free.

Identity Theft Insurance

There is no need to pay out to protect yourself against identify theft, even if it is a serious issue. Your credit card company should automatically refund any nefarious purchases if you can prove you were the victim of identity theft.

Payment Protection Insurance

Considering the fact that 80% of claims on PPI policies are rejected, it’s no wonder that this has become the most complained about financial product ever, with bankc in the UK setting aside over £12 billion.

Car Rental Excess Waivers

Even though basic insurance is often included with the fee of a car rental, many customers are tricked into paying exorbitant excess rates. Better deals can often be found online, so do some research before you leave to pick up your rental vehicle.

Extended Warranties

Many people pay out for extended warranties, which guarantees a product’s working life for a period after the basic warranty. Shop around before you settle on paying for an extended warranty.

Store Credit Cards

Store cards, made to look enticing with promises of discounts and gifts, are a terrible deal and usually come with exorbitant interest rates. Avoid signing up for a store credit card at all costs.

Bundled Bank Accounts

Most prepackaged bank accounts come with hidden fees for add-ons you don’t really need. Avoid paying extra for a bundled account.

EHIC Cards

While you certainly need a European Health Insurance Card when traveling, you shouldn’t pay for one. Head to the official EHIC website to avoid being swindled by bogus handlers.

Premium Phone Numbers

Try to find alternative company phone numbers instead of paying for a premium one.

Payday Loans

The annual percentage rate at many payday lenders exceeds 4,000 percent. A much better option is to send your account in to overdraft for a few days.

These are ten things you should officially never pay for. Keep this list in mind and avoid being taken advantage of.

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