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Bill in Senate focuses on debt settlement
By Angela Hawke on May 2nd, 2010
New legislation in the U.S. Senate aims at further regulation of the debt settlement industry, including introducing limits on fees and additional enforcement power on these companies.
The bill, which was presented by Democrats Charles Schumer and Claire McCaskill, would require debt settlement companies to itemize their services while capping fees charged to consumers. These organizations would also not be able to collect fees until they have proven that a person's debt was actually settled.
Schumer and McCaskill introduced the legislation in response to criticisms that some debt settlement companies charge upfront fees without ever providing any service. As a result, consumers are left owing even more money, which adversely affects their credit score.
"This bill would rightfully crack down on these predatory practices and help protect hard-working families who are struggling to pay off their bills," McCaskill said.
Other efforts have been introduced at the state level, including legislation from Illinois Attorney General Lisa Madigan. Through the bill, debt settlement companies that operate in the state would have to obtain a license and would be limited in their ability to charge fees.
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