How Debt Relief Has Changed Over the Years

Debt relief, like any industry, has changed a lot since its beginning. The debt relief of 10 years ago was an entirely different ballgame than the debt relief of today. Why? Well, a combination of factors have come together to advance the industry.

First of all, people simply have faster, better access to technology. This means consumers can do thorough research before enrolling in a debt relief program—and they can understand the process beforehand. People can also read reviews to get a feel for what to expect, and this social proof is very important in keeping debt relief organizations accountable for their actions.

Another factor that shaped the debt relief industry is increasingly stringent federal regulations meant to protect consumers from scams.

Here’s more on how debt relief has changed over the years and why it matters.

How the Advance Fee Ban Changed the Industry

You can really divide debt relief into before and after chapters divided by the date October 27, 2010. This is when the Federal Trade Commission moved to protect consumers by putting in place regulations colloquially called the “advance fee ban.”

According to the FTC, this advance fee ban prohibits debt relief providers from collecting fees until:

1. The debt relief organization has settled or changed the terms of at least one of the enrollees’ debts.
2. The consumer and creditor have reached a settlement, debt management plan or other agreement.
3. The consumer has made at least one payment to the creditor resulting from this agreement negotiated by the debt relief organization.

Before this ban took place, companies tended to collect monthly fees even before they’d settled any debts—an environment that unfortunately “allowed bad actors to survive and thrive” rather than rewarding companies for getting results, according to Freedom Debt Relief co-founder Andrew Housser. He notes that it ended up being a great thing for the industry because it “cleaned out most of the knuckleheads.”

Finding Legitimate Debt Relief & Avoiding Scams

If you’re one of the many, many Americans unsure of how to handle serious debt and are considering debt relief as a solution, knowing about this advance fee ban can help you identify a huge red flag.  Companies that asks for payment up front before actually settling a debt should be avoided. Reputable companies will stick to FTC regulations closely, so avoid any organization that tries to extract payment before they’ve provided even the most basic service to you.

Another warning sign to watch for is any company that guarantees it can get rid of your unsecured debt. While debt relief organizations can negotiate with creditors, they cannot control them. So, there’s never a guarantee that they’ll be able to achieve a certain result. Any organization that asserts this ahead of time is “writing a check they can’t cash,” so to speak.

Doing the Research

Finding legitimate debt relief is a matter of doing your research before enrolling. Luckily, we all have access to a wealth of information at our fingertips. You can find out a lot about various debt relief organizations by looking through consumer reviews online. Verify that whatever program you’re considering has a track record of helping people actually settle debt, and a web presence that backs it up as a legitimate company. Any legitimate organization will make sure you’re a good fit before accepting you as an enrollee; and will be willing to provide transparent information about their operations before requiring you to sign anything or hand over your account information.

Final Thoughts

Debt relief has changed for the better within the last decade, but it’s still important to know what makes an organization legitimate so you can maximize your chances of settlement success.