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Daily Q&A: Can debt relief companies charge advance fees?

Can debt relief companies charge advance fees?

A new rule that goes into effect Oct. 27, prohibits "companies that sell debt relief services over the telephone from charging fees before settling or reducing a customer's credit card or other unsecured debt," the Federal Trade Commission says.

The new advance fee ban states that fees for debt relief services can not be collected until:

• The debt relief service successfully settles or changes the terms of at least one of the consumer's debts;

• There is a settlement agreement, debt management plan, or other agreement between the consumer and the creditor that the consumer has agreed to; and

• The consumer has made at least one payment to the creditor as a result of the agreement negotiated by the debt relief provider.

For more information, visit: http://www.ftc.gov/opa/2010/10/debtrelief.shtm

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Daily Q&A: Can debt relief companies charge advance fees? 10/21/10 [Last modified: Thursday, October 21, 2010 8:33pm]
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