As the economy weakens, a growing number of consumers are paying big money for services from debt-settlement companies that purport to help them settle their debts for a fraction of what they owe, but some consumers are finding that the claims are too good to be true, according to a report in the Wall Street Journal today. At financial-services Web site Credit.com, the number of complaints about debt-settlement companies received so far this year is already double the number received in all of 2007, says John Ulzheimer, the site’s president of consumer education.
The Federal Trade Commission, which has also seen an increase in consumer complaints, was concerned enough about the issue that it held a workshop last month to examine debt-settlement business practices. Regulators, consumer advocates and industry groups are taking a closer look at debt-settlement firms. However, even some nonprofit organizations that offer alternatives, such as credit counseling and education, have come under scrutiny, with the Internal Revenue Service examining their ties to for-profit outfits. Read more.
Debt settlement firms must be registered to legally operate in the State of Texas, and most are not. These services must be registered with the Texas Consumer Credit Commissioner in order to be operating legally. A list of those services that are registered is available through the Texas Consumer Credit Commissioner.