A debt relief company promises to assist you in managing your debt or to repay it in your own terms and convenience for which they will charge a service fee from you. However, there is no reason to believe that these companies are always successful in such efforts. This is because the end result and success entirely depends on the willingness and connivance of the creditors or the debt collectors to be flexible enough to make such changes in their lending policy and terms.
According to the law the creditors are not obligated or cannot be forced to agree to your terms that you may have put to them through the debt relief company. In such a situation it is but natural that the debt relief company is not entitled to collect any service fees from you simply because there was no real ‘service’ provided to you. Any failed effort do not warrant for any service fees.
However, all debt relief companies are not so honest with their business practices and there are more than one too many instances wherein they have charged their customers their service fees and even an amount to pay the creditors without even starting the negotiating process with the creditor. A lot of customers were duped and were harassed by the unfair collection practices in the past which called the Federal Trade Commission to intervene.
The FTC designed new laws to prevent the debt relief services from such unfair practices and the new law specifically emphasizes on the collecting fees. If you hire or provide debt relief services, you must know this new Rule and act accordingly.
Law regarding the fees
The new rule about collecting fees as formulated by the Federal Trade Commission is applicable to all debt relief companies. Therefore, whether you choose Nationaldebtrelief.com or any other, you must know that the law says that no one can collect any fee from the customer until they meet a few specific requirements. These are:
The debt relief company must reach to a successful result after negotiating on behalf of their customer. In this process the company may perform several duties after which they can think about claiming their fees. Such actions involve:
The second requirement by the debt relief companies to claim their fees is that there must be an agreement between the customer and the creditor. In this regard the law states lays down the following considerations:
According to the new rule there are also a few other requirements such as:
The third requirement as per the law is that the debt relief company cannot front-load your fees.
Under such situation the dent relief company may collect a portion of their full fee.
Therefore, until and unless you complete one or all of these three required steps in connection to your debt management or repayment, the new rule allows you not to pay the service fees to the debt relief company you have hired.
Calculating the fees
The new TSR rule also provides the debt relief companies with two options to calculate the debt relief service fees from their customers who have enrolled for hiring their services for multiple debts. These options are:
All these rules save the customers as the debt relief companies cannot overcharge.