More and more debt settlement companies have popped up charging cash strapped consumers an upfront fee to negotiate and reduce their debt. Many simply made the consumer's problem worse, much worse in some cases.
"they promise to pay off a customer's bill, 6 months later, they haven't paid and a consumer is getting hit with overdue notices and possible a foreclosure", said Mike Coil of the Better Business Bureau.
The Better Business Bureau has fielded nearly 4000 complaints about debt settlement companies since the start of the recession nearly three years ago. Most complained of being deeper in debt and creditors not being paid, the actions have prompted action from both Indiana State and Federal officials.
The debt settlement companies will soon be facing much tighter regulations, in fact at the end of October the Federal Trade Commission will have a new rule that will not allow them to charge up front fees before doing any work on their credit.
Joe Schenkel/CEO Consumer Credit Counseling said "the universe of bad players and good players is gonna shrink and hopefully it's gonna be more good players in a smaller universe".
Consumer Credit Counseling in Fort Wayne is one of the good players, the not-for-profit agency offers free counseling and currently has 600 in their debt management program. Last year they saw a peak where 40% of new clients were left with bankruptcy as their only option.
While no local company is listed with an F rating there are plenty of national firms the BBB gives a failing grade to, including Professional Debt Relief, FDN Solutions and Taxmasters.
"the companies with an F rating are not living up t
o what they promise a consumer", said Mike Coil.
Just last month, a new Indiana law went into effect that requires a license and disclosures from debt settlement companies, but no regulation of charges. There are many good companies that can help you get your financial life back in order, but make sure to check their rating and history and until October, watch for upfront fees and promises of an easy process.
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