Debt settlement companies are famous for promising a world of help, but not actually delivering any. They know that the average person will be willing to pay just about anything in order to help and get themselves out of debt, so they charge astronomical fees for their assistance. The only problem is that they consumer pays, but they never actually deliver what they promise.
Federal Fair Debt Collection Practices Act (FDCPA) was put into place in order to require them to reach at least minimum requirements in order to accept the fees paid by the consumer. This basically means that they are actually required to assist you. The rules and regulations have gotten so strict that many settlement companies have gone under because they were not actually prepared to do all of the work required to stay in business.
A strong effort has been made to limit the amount of compensation that a debt settlement company is allowed to collect. They will not be able to collect upfront fees, but will only be able to collect once they have successfully been able to settle the account. Since the majority of of the companies were charging fees upfront, this has put a lot of them out of business.
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 company. During this time they 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.
Federal Fair Debt Collection Practices Act (FDCPA) was put into place in order to require them to reach at least minimum requirements in order to accept the fees paid by the consumer. This basically means that they are actually required to assist you. The rules and regulations have gotten so strict that many settlement companies have gone under because they were not actually prepared to do all of the work required to stay in business.
A strong effort has been made to limit the amount of compensation that a debt settlement company is allowed to collect. They will not be able to collect upfront fees, but will only be able to collect once they have successfully been able to settle the account. Since the majority of of the companies were charging fees upfront, this has put a lot of them out of business.
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 company. During this time they 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.
Melvin R. Singleterry, owner of is a practicing attorney who specializes in Consumer Debt Law and debt reduction. Singleterry, who holds a Bachelor and Master of Arts degrees from Oklahoma State University and a Juris Doctor from The University of Oklahoma, has practiced in both State and Federal Courts.
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