Clean Up Credit Report-Now

Many consumers in attempting to Clean Up Credit Report and reduce debt seek the assistance of unscrupulous for-profit debt settlement companies. According to a recent report debt settlement companies have been the subject of thousands of consumer complaints with more than 250 companies charged with false advertising. If you insist upon using a for-profit debt settlement company, the Federal Trade Commission (FTC) recently implemented new rules that will hopefully limit your exposure to fraudulent companies.

The main components of the new rules are Fees, Dedicate Accounts and Better Disclosures:

Fees: For-profit debt settlement companies that sell their services over the telephone are barred from collecting upfront fees before providing any services. Fees may not be collected until: (1) at least one of the consumer’s debts have been successfully renegotiated, settled or reduced; (2) the consumer has agreed to a written settlement agreement or debt management plan; and (3) the consumer has made at least one payment to the creditor pursuant to the written agreement.

Dedicated Account: A dedicated account is a specific account created for deposit of the consumer’s fees and savings for payment to creditors. Debt settlement companies are allowed to request such accounts be created if the creation meet all of the following conditions: (1) the account is maintained at an insured financial institutions such as banks, credit unions, etc: (2) the consumer owns the account including any accrued interest; (3) the consumer can withdraw the funds at any time without penalty; (4) the debt settlement company must not own, control or have any affiliation with the institution administering the account; and (5) the debt settlement company must not exchange any referral fees with the institution administering the account.

Better Disclosures: Before the consumer signs up for the debt relief services the company must disclose, how long it will take before results are seen, how much it will cost, any negative consequences that could result from using debt relief services and any key information about dedicated accounts if one is required.

I recommend that if you need a third party to assist you in settling your debt as opposed to settling your debt yourself, use a non-profit counseling agency to obtain advice about how to pay your debt and clean up your credit report. These agencies can assist you in setting up a plan of action of reducing your debt, paying your bills in a timely manner and ultimately cleaning up your credit report.