In the past, critics often derided the debt settlement industry as being very dangerous for consumers. But thanks to new federal laws governing the industry, it’s now considered much safer.
Debt settlement companies will be required to actually reduce a consumer’s total debt amount before they charge for their services starting on October 27, the Wall Street Journal reports. Many of these companies promise they can get creditors to remove as much as 60 percent of their total debt, and they are often successful, but it’s also not a guarantee.
However, many in the industry think that while these new laws could be trouble for businesses, they also understand the regulations will make it healthier in the long run, the Journal noted. However, these changes do not affect the way nonprofit debt relief organizations operate, because the Federal Trade Commission has no power over them.
Consumers may find considerable relief from the services of a debt relief company, but they should also understand that using one offers no guarantee their debt can be reduced.