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You might have noticed that many companies are advertising services to settle your credit card debt. It’s hard to leave these companies if you watch television or read the newspapers. While the idea of debt settlement sounds great, in reality many of those companies are scam artists.
Washington has a law that regulates credit card debt settlement companies. The law defines “debt adjustment” as “the management, consultation, settlement, adjustment, prepayment or liquidation of the indebtedness of a debtor, or to distribute the said funds among creditors in payment or part payment of obligations.” Receives money for the purpose. Debtor.” A loan adjuster is any person or business that engages in the business of credit card or home loan settlement for compensation. The Attorney General’s Office on Consumer Fraud and the Department of Financial Institutions enforce this law. Violation of the statute is also a violation of the Consumer Protection Act, which entitles the debtor to treble damages in civil litigation.
Washington rules limit the fee that can be charged for credit card settlements. The fee retained by the company from any one payment made by or on behalf of the debtor does not exceed fifteen per cent of the total amount of that payment. In addition, the Act requires that the company distribute to creditors at least 85% of each payment received by the debtor not later than forty days after it is received. If a debt adjuster contracts for, receives, or makes payments in excess of the maximum allowed, the debt adjuster’s contract with the debtor will be “voided” and the debt adjuster will return all payments received from the debtor and not disbursed. would be creditors. Finally, all money received from debtors must be placed in a trust account by the debt adjuster and billed against it.
This is a powerful law. This means that 85% of each payment you make to the debt settlement company must be applied to your debt. If the company fails to enforce even a single payment, you are entitled to a refund of everything you paid to them. However, the state of Washington does little or nothing to prevent debt settlement scams. A review of the DFI’s “Consumer Alerts” webpage found no warnings against debt settlement companies. The DFI’s focus is on home loan modification scams, but even there it does relatively little. The Attorney General’s Office doesn’t do much.
Where does this leave you if you have been cheated by a debt settlement company? The Debt Adjuster Act is still a powerful tool, but it’s left up to you to use it.
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