The Debt Consolidation Rules You Need To Know

The Debt Consolidation Rules You Need To Know

Thanks to recent sweeping changes in consumer protection laws, the legalities of debt consolidation have become something of a mysterious subject. Exactly what do these new laws promise? What can consumers do to ensure that they're hiring the right debt consolidation company to reduce their debtsAnd what rights do they have if they discover that they've been scammed?Well, wonder no longer - because when it comes to debt consolidation, we've simplified the new consumer protection laws so that you can better understand your rights:- By law, debt consolidation companies are required to outline exactly how much they'll charge you to settle your debt. No debt consolidation service can charge an upfront fee for the service - and if you see a final fee that's any higher than the price of a tank of gas, then it's highly likely that you're being ripped off.- The debt consolidation company must outline exactly how long it will take to reduce your debt. Don't fall for "optimistic" promises of three months; depending on the total amount of debt, a real consolidation program can last for a few years.- Additionally, the debt consolidation service must be upfront with the negative consequences of using their service. For example, consolidating your debt can result in reduced credit scores, legal action from creditors and a high tax bill as a result from having debt forgiven. As you can see, debt consolidation does have its drawbacks - and any company that promises you a hassle-free experience isn't being 100% honest with you.In addition to these laws, new regulations mandate that a debt consolidation company cannot collect payment for their services unless:- They've successfully renegotiated your debt with your creditors. As long as a debt consolidation service has changed the terms to at least one of your debts, they're entitled to their service fee.- You've signed a written terms of agreement that details the debt reduction strategy; additionally, this agreement should be approved by your creditor before you sign it.- The consumer has made at least one payment to the creditor under the terms of the new agreement. Now that these debt consolidation legalities have been demystified, you can feel confident about your decision to bring in a third party to reduce those sky-high bills.

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