Debt Consolidation Rules and Regulations

The Federal Trade Commission, or FTC, is a government agency that works to protect consumers against fraudulent and deceptive business practices. These range from a variety of sources including the internet, telemarketing agencies, and identity theft. With the help of Americans, they act as watchdogs for consumer rights. In terms of offensive measures, the FTC  works to ensure debt consolidation companies are held to specific standards. Here are several debt consolidation rules and regulations that you should know about in the event you receive correspondence from a company offering these services.

Debt Consolidation Rules and Regulations

Fees Must Be Disclosed Up Front

Any company that accepts profit for their debt consolidation services must disclose the full fee as well as their refund policy ahead of time. Additionally, this cannot be a best guess or estimate. They also cannot collect the entire fee up front.

Time Line for Debt Consolidation Must Be Established

The debt consolidation company must give you a realistic estimate of time that you can expect their program to last. This should be based on the results of previous experiences with creditors.

Debt Consolidation Savings Must Be Accurately Stated

Much like the truth in advertising laws, the FTC Debt consolidation rules state that companies must give accurate figures on how much money you will actually save with their programs. Again, these savings should be based on previous settlements with real clients.

Your Debt Consolidation Funds Must be Held in Insured Savings Account

When you go into a debt consolidation program the company will collect your payments into a “war chest” in order to have money to draw out of in order to settle your debts. In the past, companies inappropriately labeled this an escrow account that wasn’t held by an insured financial institution. In accordance with FTC guidelines, these funds must be placed in a dedicated account with an FDIC insured bank. You, the consumer, should have control and ownership of these funds at all times.

Many of these rules and regulations can be found on the Sacramento bankruptcy attorney or the state’s attorney to lodge a formal complaint.