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Illinois debt settlement law criticized by industry CEO
By Marvin Milner on May 26th, 2010
Legislators in Illinois recently sent a bill to Governor Pat Quinn that would limit the ability of debt settlement companies to charge fees for their services.
However, the legislation could limit consumer choice regarding how to handle debt, according to Andrew Housser. In a letter to the Chicago Tribune, Housser, chief executive officer of a debt settlement company in California, said these firms have helped thousands of people in the state deal with debts that might require bankruptcy otherwise.
"HB 4781, the so-called Illinois Debt Settlement Consumer Protection Act, which awaits the governor's signature, would put debt settlement out of business due to draconian restrictions that cap fees well below what it costs to provide the service," Housser said.
Through the bill, debt settlement companies would have to register with the state. Furthermore, they could only charge a one-time subscription fee until they provide the settlement services. Once they do so, the amount they charge is capped to certain percentage of the savings achieved by the consumer.
The law, which was spearheaded by Illinois Attorney General Lisa Madigan, was created to fight against debt settlement companies that charge consumers upfront fees without providing any service, which could leave people worse off than when they started.
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