Debt Free Destiny

While almost every business in the nation continues the fight to keep their doors open, one industry finds itself bombarded with business opportunities. As more and more people find themselves facing financial circumstances that threaten their financial security, it becomes hard to resist programs that promise relief from debt. Although debt settlement itself is not a new concept, the number of fraudulent companies that are currently flooding the industry have resulted in increased public interest in the process and companies offering programs to help consumers eliminate debt. The state of New York is taking a stand against debt settlement companies who target desperate and vulnerable consumers as reported in two press releases from the Attorney General's Office in May of this year. Debt settlement companies are under fire with New York's Attorney General, Andrew Cuoma and the state's Banking Department. On May 7, 2009 the Attorney General's office announced the launch of a nationwide investigation into the debt settlement industry which resulted in fourteen debt settlement companies and one law firm receiving subpoenas. The subpoenas requested information regarding the companies' fee structures as well as how many people have been helped by advertised services. On the heels of the first announcement another press release dated May 19, 2009 states the Attorney General's office filed suit against two settlement companies for false advertising and fraudulent business practices.

The New York State Banking Department is also recommending an increase in regulations within the industry. The need for consumer protection tops the list of benefits gained by regulating this largely unregulated industry. The Banking Department suggests debt settlement companies operate under the same rules as budget planners in the state of New York. Budget planners provide the same type of services as credit counseling agencies, providing education and assistance aimed to help consumers improve their money management skills. Budget planners also collect and distribute payments to creditors per an agreement established between the consumer, debt management plan and creditors. Since debt settlement companies do not handle consumer payments to creditors (until settlements have been negotiated) they currently operate without any regulatory oversight. The recommended regulations would require companies to be licensed with the state and follow certain rules that would provide added protection for consumers trying to eliminate their debt through the use of debt settlement programs.

Whether or not debt settlement companies are regulated or they continue to play by their own rules, few people will argue the fact that ultimately it is the consumer who must take steps to protect themselves from falling victim to a fraudulent company. Protect yourself by carefully researching any company before sharing private financial information or signing a binding contract. Educate yourself on the process of negotiating debt and possible risks associated with this form of debt elimination. A few minutes on the Internet can quickly reveal information that will help you make an informed decision such as Better Business Bureau ratings and reviews from former clients. Increased government regulation and knowledgeable consumers will be the first step in putting fraudulent companies out of business.