Each new day seems to bring a new attack on companies in the for-profit debt consolidation and settlement businesses. Critics of these companies say that they charge fees that are too high, or that they levy interest rates on their debt consolidation loans that are simply exorbitant. Some companies working in this field deserve the criticism. They do overcharge, taking advantage of desperate consumers willing to pay just about anything to stop the collection agencies from calling. But others provide a valuable service. It’s unfair, then, to call the entire debt consolidation and settlement industry corrupt, just as it’s unfair to say that all lawyers are shady and all salesmen are sneaky.
Illinois Aiming At Debt Management Companies
The latest state firing a salvo at debt consolidation and settlement firms is Illinois. Consumer advocates and legislators here are in the middle of debating the Illinois Debt Settlement Consumer Protection Act, which would put restrictions on the way debt settlement and consolidation firms do business. The Illinois House of Representatives has already passed the measure. Members of the state’s Senate are now considering the bill, though it looks likely to pass. What will the legislation mean to debt consolidation and settlement companies in Illinois? It would forbid companies from charging upfront fees, save for a $50 enrollment fee, for consolidating or settling debt. It would also require them to give refunds to customers who drop out of their programs. It would also allow consolidation and settlement firms to charge based on what they save customers, not on how much customers owe to creditors.
Will It Put Consolidation Companies Out Of Business?
Critics of the measure worry that it will drive debt consolidation and settlement firms out of the state of Illinois, leaving its residents who are struggling economically with fewer options. However, the bill doesn’t seem to ask anything unreasonable of debt management companies. In fact, it targets all the shady practices that have given these companies such a bad reputation in the first place.
The Illinois Debt Settlement Consumer Protection Act seems to be asking debt consolidation and settlement companies to act fairly in their dealings with consumers. In essence, the state’s politicians are asking the companies to refrain from taking advantage of consumers simply because these consumers are in desperate financial straits. Is this unreasonable? It hardly seems so. In fact, whenever debt management companies fight legislation such as this, claiming that the passage of such bills will ultimately harm consumers, it makes them look all the more untrustworthy. This is a disservice to those debt firms that actually do work honestly and do charge reasonable fees. It helps paint an entire industry with the same negativity.