Debt settlement companies face new rules in Indiana

By Peggy Stillwell on Jun 26th, 2010

A new law is about to take effect in Indiana that would add more regulation to debt settlement companies.

In a piece for legal information website Lexology.com, law firm Loeb & Loeb LLP said that starting on July 1, debt settlement companies will have to get a $25,000 surety bond. They will also have to present a copy of the bond to the state's attorney general's office while making disclosures to consumers in the Hoosier State.

"The new law subjects debt settlement companies to the same requirements and restrictions that previously governed credit repair, loan modification and loan consolidation companies," the firm said.

Debt settlement outfits will have to detail they type of service they will offer to prospective clients, while also outlining the costs they will face. They will also have to highlight the fact that nonprofit consumer credit counseling agencies are available.

Other states are also looking to further regulate the debt settlement industry, which some consumer advocates say takes advantage of people in debt. Illinois Governor Pat Quinn currently has a bill on his desk that would limit the fees these companies can charge.

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