Got Debt? Arkansas AG Offers List of Easy Solutions

If it sounds too good to be true and quite often it is: debt relief, debt settlement, and debt negotiation company ads claim that the companies they represent can reduce or eliminate your unsecured debt. On October 27, 2010, new amendments to the Federal Trade Commission's Telemarketing Sales Rule went into effect. These amendments prohibit for-profit debt relief companies from charging advance fees before completing the services they claim to provide. Today, Attorney General Dustin McDaniel released this consumer alert, providing updated information for Arkansas consumers on the FTC’s new rules.

“While debt relief services may seem like an attractive option to consumers looking to regain financial security, my office, the FTC, and other consumer protection agencies have found many of these services cannot follow through on their advertised promises,” McDaniel said. “Many providers’ advertisements and ensuing telemarketing pitches include false, misleading, or unsubstantiated representations.”

The FTC found that a large percentage of customers who enrolled in such plans failed to obtain results represented by the company. “The most important element of the new rule is a prohibition on the charging of any fee before the promised services are delivered,” McDaniel added.

The amended rule covers telemarketers of for-profit debt relief services, including credit counseling, debt settlement, and debt negotiation services. The rule does not cover nonprofit firms, but does cover companies that falsely claim nonprofit status. The rule applies to both outbound calls, as well as inbounds calls made by consumers as a result of advertising.

To learn more about the new FTC rules, visit http://www.ftc.gov/opa/2010/10/debtrelief.shtm.

If you are burdened by debt, here are some tips to remember:

• Talk to your creditors directly. Often times they will lower your interest rate upon request and some may be willing to work out a modified payment plan.

• Talk to a legitimate non-profit credit counseling service. These organizations will work with you to come up with a monthly payment plan to satisfy all of your unsecured creditors. Counseling organizations may require a relatively small fee for this service. Beware of any service that charges a substantial fee up front.

• Talk to an attorney. An attorney can also advise you as to your financial options, especially if you are considering filing bankruptcy.

If you are unsuccessful in managing your debt, bankruptcy may be the appropriate option. However, you should be aware that bankruptcy information stays on your credit report for years, and can negatively impact your ability to complete basic but essential financial transactions like getting a new car or home. It can also impact your career, as many employers review credit reports before hiring candidates. For more information about bankruptcy, visit http://www.uscourts.gov/bankruptcycourts.html.

If you have questions about or are unsatisfied with a debt relief service, contact the Public Protection Department of the Attorney General's Office at 501-682-2341 or toll-free statewide at 1-800-482-8982.