Debt settlement industry in a fight for its life

November 10, 9:57 AMPhoenix Your Money ExaminerGarland McDonald

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The debt settlement industry is engaged in an on-going battle with financial institutions who are pressing the FTC for an amendment to 16CFR Part 310, commonly known as the "Telemarketing Sales Rule".

If passed this amendment has the potential to bring an entire industry to an end. This would, to the detriment of the American consumer,  effectively shut down one of only three viable alternatives presently available to help consumers legally eliminate their debt.

The cause of the FTC's concern are the number of complaints regarding debt settlement. They have increased geometrically in the last two years and are indicative of the explosive growth the debt settlement industry has experienced.

According to debt settlement trade associations such as The Association of Settlement Companies (TASC) and USOBA, the underlying cause of these complaints are the lies being propagated by banks, debt collectors, consumer credit counseling services and other financial institutions.

At a hearing before the FTC on Thursday, Nov. 4, 2009, a special panel of the FTC heard testimony from attorney's for the industry regarding such misrepresentations as: "Banks don't settle with such companies" or that "the industry is illegal or unethical".

The J. Hass Group was among the industry representatives to testify. In a 154 page research report the J. Hass Group, their attorneys, and others presented evidence to the committee that the debt settlement industry has averaged a 34% success rate.  This stands in contrast to credit counseling, collection agencies, and financial institution efforts which sport a collection efficiency/success rate of less than 10%.