Business

New federal rules take aim at shady practices of debt-settlement companies

interns Contributor

Got debt?

Well, if you do, the federal government has made it more difficult for unscrupulous or sham debt-settlement companies to make false claims that much of your debt can be easily erased.

Debt-settlement or debt-relief services promise to renegotiate or in some way change what you owe to an unsecured creditor or debt collector.

As the economy tanked, many people fell behind on their consumer loans and as a result were drawn in desperation to firms that claimed they could, in some cases, cut debts in half. The promised assistance might have included finding ways to reduce a debt balance, an interest rate or penalty fees.

Law enforcement officials have increasingly been receiving complaints about companies that collected fees but did little, if anything, to settle people’s debts. The Better Business Bureau said that since the recession started in late 2007, it has received thousands of consumer complaints from all 50 states about debt-settlement companies that have driven people deeper into the hole, in some cases causing them to be sued by creditors or even to have wages garnished.

Full Story: New federal rules take aim at shady practices of debt-settlement companies

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