When I first heard that the US government was going to update their rules for debt relief companies, I thought "here we go again". After all, it seems like every time they get involved with the financial industry, something goes wrong (bank bailout, new credit card rules - you get the picture).
So it's safe to say I am not a big fan of government involvement.
Even the title of the new rule is a bit misleading, or at least misguided: Telemarketing Sales Rule. Come on, who uses the term "telemarketing" any more? And what about the Internet and its role with these new rules? It just sounds so outdated.
I know, I get it. It's an update of a previous rule. And there are legal issues involved, so these rules can't sound too informal.
When you look at the content of the rules, it actually makes pretty good sense for us consumers. Too many debt relief companies (especially those offering debt settlement) charged their fees upfront, before doing any work for their customers. And too many failed to tell the complete truth, by not letting consumers know how their service really works, how it negatively affects credit, etc. And WAY too many people dropped out before getting out of debt (probably because of these upfront payments and lack of knowledge).
In the last few years dozens of new debt relief companies popped up all over the place. Just watch TV or a few hours, and you'll see at least a couple of ads for credit card debt services. So the time was right for something to be done.
Overall, I do think that these new debt relief rules WILL help consumers quite a bit.
Of course, its too bad that it came to this. But these companies lived "the high life" for way too long, collecting money and misleading people over and over again. They had their chance. The only question I have left is:
Who will be watching these companies to make sure they are following the rules? Or will there only be consequences when someone complains?
If all goes well, hopefully the end result will be that the "junk" companies will go under, and the good ones will survive. Most of the good ones probably won't have much trouble complying with these new rules. Because what makes them good is the fact that they actually perform a valuable service, and get a good reputation because of it.
But if you need professional help with debt, you still have a responsibility to do your own research. Even with these rules, some companies will be good, honest companies. And others won't. So what should you do when searching for a quality debt relief company?
- Ask lots of questions. About how their debt reduction process works...About how your account will be handled...About their fees...About their customer service...About anything else you want to know. If they don't want to answer your questions, or give you vague answers, move on to another company.
- Get everything in writing. Before you sign anything or send in any money. And make sure to read it carefully. There's no excuse later on for any problems because you didn't take the time to read the contract.
- Check out the company's rating. Go to Google.com and type in the company's name. Visit the Better Business Bureau's website. Ask for references. The more information you have about the company, the better.
It stink being in debt. But it stinks MUCH worse if you get ripped off while trying to fix the problem. So while these new rules will help reduce your chances of getting burnt by an unethical company, don't just rely on them. Do your own research, too.
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