“Pennies on the dollar”

It’s what you always hear when the talk turns to debt settlement or debt negotiation. You are usually promised a debt settlement worth “pennies on the dollar.” But, in reality, the truth might be a little more scary and a little more involved. Fraudulent debt settlement companies may not always be what they are cracked up to be, and it’s up to you to understand and notice the difference between the good guys and all the rest.

In the past five years, 21 states have sued 128 debt-relief programs, according to the National Association of Attorneys General. – The Wall Street Journal

It is for this reason, and the fact that many states have varying legislation regarding debt settlement rules, that the Federal Trade Commission (FTC) is getting involved. With complaints at an all-time high, and consumers in deeper debt than ever, the FTC is hoping to change the rules nationwide to protect the consumer and regulate the debt settlement industry.

The FTC is hoping to require full transparency from debt settlement companies, as well as limiting their ability to charge upfront fees.

Fee structures vary, but a common variant is that the consumer pays about 40% of the fee in the first few months, and the rest within the first year--though the settlements, if successful, may not occur for months or even years beyond that. Fees vary but often range from about 10% to 15% of the consumers' debt. – The Wall Street Journal

While almost every single debt settlement company in existence charges upfront fees for services not even started, there are a few reliable companies out there that have taken their outreach to the next level by charging no upfront fees. The Debt Settlement Program, as well as Your Debt Negotiator are just a few of the ACCORD certified debt settlement companies that charge no upfront fees and are attempting to change debt industry for the better.

As for the FTC wanting debt settlement companies to be more transparent about their settlement practices, The Debt Settlement Program and Your Debt Negotiator are completely honest with clients in regards to time frames, amount of monthly payments, and settlement estimates.

“I was very happy with the services and the ease of the program. You said it would take about three years, and it did. The program was very simple and the process very clear, and the instructions were easy to follow,” said T.B., a debt settlement client. “My assigned representative was extremely helpful. She answered my telephone calls or returned them promptly. She was always available.”

It’s true that debt settlement companies do not work for every client, but that is why The Debt Settlement Program as well as Your Debt Negotiator holds strict requirements for enrolling new consumers. The enrollment process is just the beginning in determining how successful any client will be, and though the debt settlement process takes work and time, with their strict enrollment process these two companies are able to work diligently to get clients out of debt.

So, as for the “pennies on the dollar” promise that many fraudulent debt settlement companies will promise their clients, it’s best to take that with a grain of salt. In following FTC suggestions, making promises upfront is no different than charging upfront fees for services not yet even started. It’s pointless, it’s fraudulent, it’s definitely not transparent, and it hurts not only the consumer who is struggling to get out of debt, but it hurts the entire debt settlement industry as well.