Understanding the FTC Debt Relief Rule

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The Federal Trade Commission passed a law in 2010 that outlines the boundaries debt relief companies must operate within. This is designed to help you, as a consumer, to avoid predatory practices that can actually lead to more debt and a bigger financial strain. These are the basics of what the FTS’s rule means for you.

Who Must Follow It

Any for-profit debt relief agency or telemarketing agency working on behalf of one must follow the FTC law. Debt relief agencies offer to negotiate rates or balances on behalf of consumers, or somehow help lower payments and bills to creditors. That can include credit counseling, debt settlement, or debt negotiation.

What Is Allowed

Under the law, a debt relief agency is allowed to provide these services to consumers as long as they make truthful claims about the processes involved, keep detailed records, and disclose certain information. Companies can require you to set aside fees for their services under certain circumstances, but they cannot collect payment until you have reached an agreement with your creditors. Rescue One Financial takes this law seriously and is fully compliant with its provisions.

What Isn’t

Perhaps the biggest bonus of the FTC law is that debt relief agencies are not allowed to collect fees upfront for any of their services. Instead, they must negotiate an agreement with your creditors, you need to make at least one payment on that agreement, and it must be a successful result for you. This provision is designed to ensure that consumers already overburdened by debt do not fall victim to predatory agencies. Advertising that makes false, inflated, or unsubstantiated claims is also banned.

You aren’t in a position to let unscrupulous businesses take your hard-earned money. If something sounds too good to be true, it probably is. Your best course of action is to use healthy doses of caution and common sense to evaluate any debt relief offers you see.