Thursday, May 23, 2013
Watchdog: Debt Settlement
COLUMBIA, S.C. (WOLO) -- Is your credit card debt mounting? With the holiday shopping season here, you may be tempted to have that debt slate wiped clean, and there are plenty of debt settlement companies out there that promise to give you a fresh start, but are they legit?
Carri Lybarker with the South Carolina Department of Consumer Affairs warns there are companies out there charging as much as fifteen percent up front, plus an additional fee once the debt is settled.
Lybarker says, "So these are consumers who don't have enough money to pay their debt to begin with who are then supposed to be squirreling away their money so a settlement can be reached at the same time is paying an exorbitant fee to the debt settlement company and what we've seen in our complaints is that work does not begin until your up front fee is paid."
South Carolina has one of the strongest credit counseling statutes in the country. In fact our state is used as a model nationwide.
Debt settlement companies in the Palmetto State are required by law to be licensed.
Last year alone, the South Carolina Department of Consumer Affairs received $2.7 million in consumer refunds from organizations that didn't comply. Lybarker warns to avoid becoming a statistic, get the facts before you sign any agreement. If the company is legit, there are several issues that will be addressed.
Lybarkers adds, "That the organization provide the consumer with a consumer education plan, that they do a budget analysis to make sure the consumer will benefit from the organization's services. It's very descriptive as to what needs to be included in the contract which includes a provision that the consumer can cancel a contract at any time."
In addition, fees that organizations can charge are capped.
What is Lybarker's best advice? Call the department first before giving any information or signing up with any debt settlement or debt negotiation organization to make sure the company is licensed.
If you want to file a complaint, you can click here to go to the Complaint Services page at the South Carolina Department of Consumer Affairs website.
Complaint Services - South Carolina Department of Consumer Affairs
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