Effect of Bill AB350 on debt settlement companies in California
Debt settlement or debt negotiation or debt arbitration is the process that helps in lowering the outstanding debt amount you owe to your creditor or creditors. You are required to negotiate with the creditors about the problem you are facing in making the debt payments. As the debt problems increased after the recession, more and more people started to seek help on debt settlement. This fueled growth of numerous debt settlement companies and thus there was also increase in scams and frauds in regards to debt settlement help.
Bill AB350 on debt settlement
In order to address the irregularities that have been prevailing in the debt settlement industry, a bill AB350 is waiting to be passed in the state of California. This bill is supposed to regulate all of the debt settlement companies there in the state of California. The bill may come into effect from January 1, 2012 and is going to provide licensing for the companies. The senators believe that this bill if passed may be able to eradicate most of the scams that the debts settlement companies do in general. As per this bill, the companies offering debt settlement help will be regulated by the Department of Corporations and they will have to be licensed in order to offer help to the debtors.
Most of the debtors have been complaining about the debt settlement companies. Most of the people are of the opinion that the companies generally charge very high service fees. The settlement companies even ask for such fees even before they are actually able to help you in settling your debts. The settlement companies charge so high fees, that many people are even forced to quit the programs.
Not only this, people have even faced difficulties in getting their creditors paid. That is, after you join a debt settlement program, you are supposed to make the monthly payments to the settlement company, they are then supposed to forward the payment to your creditors. Now, the problem that many settlement companies do is that they retain the money that you are forwarding the as their fees. As a result, they are not able to forward the required amount of money to the creditors. This hurts your credit all the more. There are also scam companies that ask to not to check your credit report so that they can run away with your money.
Talks have been going on about this bill since the year 2009. The bill also may address the fee caps, and that the consumer can at all qualify for the settlement program. That is, the settlement companies will have to conduct an analysis on the financial condition of the consumer before offering him or her required help.
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