Last Thursday saw the anticipated signing of new laws governing debt settlement operators in Illinois. Fee Caps of debt settlement and professional credit card debt negotiations. This came on the heels of federal rules announced the prior week that are designed to curb consumer abuse at a national level. Illinois went further than the FTC by capping fees. Companies providing settlement services can only now charge 15% of savings.
A 15% of savings fee, after the work is performed, is precisely what we at CRN have charged since 2006.
We support Illinois efforts to reign in debt settlement companies’ business practices that have often been found to be a source of harm rather than help for consumers seeking debt relief.
The new rules in Illinois did carve out an exemption for attorneys. This is unfortunate, as many of the companies that have been shut down in the past, have used the attorney business model. Some of these attorney led companies (whether in fact or in name only) are well documented to have created worst problems for the consumers they solicit for their programs.
Here is a quote from the Illinois AG:
“Turning to a debt settlement operator to help you pay off your credit cards is like turning to a cinderblock to help you learn how to swim,” said Attorney General Lisa Madigan. “Debt settlement operators take money from consumers and usually provide them with no services. With this new law, which is the toughest in the nation, Illinois sends a clear message to debt settlement operators: If you want to do business in Illinois, you have to provide real services to help consumers pay off their debts.”
Attorney’s settling debt in Illinois.
Madigan’s comment is just as relevant when working with many attorney debt settlement models that are mass marketed to the public by affiliate sales people.
I would encourage any Illinois consumer looking for outside assistance to settle their debt, locate a company who will charge no more than 15% of savings. Anything over that, and you are paying too much!
If you are in Illinois and thinking about settling debts, post a little bit about your situation in the comments below. I can offer you feedback and help you consider your next best step.