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Warnings for Debt Resolution through Debt Settlement

According to the National Association of Consumer Bankruptcy Attorneys, consumers need to act with caution before accepting an offer from a company that promises to negotiate on their behalf with lenders and credit card companies for debt resolution. Many cash-strapped borrowers do not realize the many hazards of working with debt settlement companies. Unfortunately, many consumers who pursue debt resolution through debt settlement services find themselves facing even steeper financial losses instead of relief. The association states that debt settlement companies often advise their clients to stop paying their bills. Making such a move often results in higher penalties, fines and fees leaving borrowers deeper in debt.

The association takes a strong stand against recommending that consumers breach their contractual obligations. These types of schemes are a trap for most consumers and are an inherent part of the industry’s standard business model. To protect consumers who are seeking debt resolution, the association recommends for consumers to avoid companies that promise to pay off unsecured debts at significant amounts, charge monthly fees or demand payment for a portion of the amount promised to save the consumer. The American Fair Credit Council, the trade group that represents debt settlement companies, has only responded to the association’s warnings by stating that companies who offer debt resolution for consumers must operate according to the Federal Trade Commission’s (FTC) rules.

Robert Birnbaum, the council’s president, maintains that many debt settlement companies follow the FTC’s rules. He has said again and again that most of the companies promote debt settlement plans consistent with the FTC’s advertising rules and do not accept compensation until the consumer has accepted a settlement or at least has made one payment toward completion of the settlement.

The recent bankruptcy attorneys’ warnings come as a result of regulators’ efforts to begin policing firms that offer to modify loans and mortgages. Recently, the FTC has filed numerous lawsuits in Ohio, California and Florida. All were reported to be alleged scams that offered to relieve borrowers of mortgage burdens. The Consumer Financial Protection Bureau (CFPB) has also filed suit against a Los Angeles law practice over an alleged debt relief rip-off. As a result, California regulators have put warnings out to consumers to proceed with caution when it comes to promises for loan modifications.

Rescue One Financial has a great reputation and has helped millions of hard-working people resolve their debts.

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