If you get sick and your doctor took obvious steps to make you even sicker, at least quickly find a new doctor. Of course, as a doctor – or most any other professional participation in clear abuse – also face serious sanctions.
However, in recent years debt settlement operators have benefited handsomely while blatantly doing their “patients” more financially sick, and so far no one has blocked their recipes terrible.
This has to stop. They need to be held accountable.
The signature on the right of initiative of my office – the Illinois Debt Settlement Consumer Protection Act – will provides Illinois consumers with greater protection of the nation against the abuses and victimization of these companies.
Consumers are generally at their most vulnerable when they seeking help from these companies. They come with crushing credit card, medical bills or other guidance and seeking a way out of their financial morass.
Too often, however, is cheated by the bad advice that leads them not to leave the quagmire of debt, but rather over the cliff into insolvency. In fact, 30-40 percent of people who end up filing for bankruptcy have done so after having given money to an operator to pay the debt.
The need for this new law grew out of the drastic increase my office has seen recently in complaints against dishonest debt settlement operators. Since 2009, my office has filed seven lawsuits against companies that use unfair and deceptive means to get cash to consumers in Illinois who pledged to help through their financial problems.
Not surprisingly, these companies flourished as our economy suffered a drought. The financial challenges faced by millions during the deep recession have proved a fertile ground for companies debt settlement duplication.
Typically, a consumer will be attracted by promises that their credit card debt can be paid for a fraction of the amount due. The consumer is always necessary to pay the company non-refundable fees in advance – often thousands of dollars – but that’s only the beginning of the nightmare.
Consumers also said to stop paying your credit card companies instead of paying into an account administered by the debt settlement company. In theory, after many months of this fund has grown to the point where it can be used to negotiate an agreement with the credit card company.
Unfortunately, it is rarely actually reached a settlement. About two thirds of consumers abandon these programs before their debts are settled. Not only lost thousands of dollars in fees are not refundable, are often deeper in debt than when they started thanks to penalties and surcharges imposed by the credit card companies due to lack of payments.
Many consumers also end up being sued by credit card companies despite spending thousands on the promises of a debt settlement operator.
The Illinois Debt Settlement Consumer Protection Act will prohibits this behavior appalling. By law, companies cannot charge in advance any registration or maintenance fees beyond a fee of up to $ 50.
The law also requires debt settlement firms to effectively resolve claims before they can obtain payment. Fees are capped at a maximum of 15 percent of the savings from debt settlement.
The law also prohibits misleading advertising and promises of these companies. And above all not only be barred from advising consumers to suspend payments to creditors, but also requires them to place a specific warning signs before signing a contract, such as:
• Creditors can still try to charge by contacting you, suing you and garnishing your wages or bank account.
• Not all creditors agree to accept a balance reduction.
• Your credit rating and credit score is likely to be harmed.
Legitimate non-profit credit counseling services that exist and help many consumers. The National Foundation for Credit Counseling can help you identify these companies on its site.
I often say that the payment of its debt is like dieting. There is no miracle cure, but it requires discipline and hard work.
Millions of people struggle financially as one of the most severe recessions in the history of our country lags behind. While most of us are trying to be more frugal, a job loss, divorce or medical emergency can quickly sink deeply into debt.
Hard work, planning and realistic financial advice is required by many to regain solvency. The Illinois Debt Settlement Consumer Protection Act at least ensures that those fighting are not thrown an anchor when they need is a lifesaver.