The No Advance Fee Regulation: Making Debt Settlement Mo Betta’

Written by Amanda Boehm-Garcia   // June 17, 2011   // 3 Comments

Photo by @jbtaylor

The FTC has done a cleansing in its rules for debt relief and debt settlement companies over the last year. To be fair to big brother, the new rules were needed and our government had to step in to help consumers get some additional protection when dealing with less than scrupulous providers of these services.

Many consumers, desperate to get out of mounting credit card debt have searched for an option that will allow them to pay or be forgiven what they owe. Most often times, the debt was accrued because of medical debt, school-related costs, failing businesses, job loss, and mortgage payments that were impossible to stay current on. Most people want to get rid of the unsecured debts and move on with their lives. These options include credit counseling, bankruptcy, and debt settlement. Depending on your situation, any of these options may get you to your goals much sooner than paying a balance in full.

In recent years, the debt settlement industry has grown as one of the most viable options to deal with unsecured debts, such as those associated with credit cards. A lot of people choose to go down this path, since it is an accelerated method to debt reduction. Every method to get out of debt has it’s draw-backs. Credit counseling takes longer and only reduces interest rates, bankruptcy can stay on your credit report for 7 to 10 years, and debt settlement usually sets up a savings account in which monthly payments accumulate until there is enough money to negotiate with while the consumer discontinues making payments to their creditor(s). Unless you can pay back the full amount of your debts, these other debt options do have their costs and it is up to you in choosing an alternative method.

What makes debt settlement a topic of renewed special interest are the huge rule changes. A few honest companies out there were following a strict set of guidelines, without FTC rulings before July 2010. However, there were many companies – in the before time – that were just taking distressed consumers money and disappearing or just simply not following through on their contractual obligations. Instead of the FTC or other government agencies going after the companies that were taking advantage of consumers, they took a holistic approach and brought the hammer of the FTC gods down on everyone. The hottest item that has been put into play was the “No Advance Fee” regulation. The regulation was an excellent way of getting rid of the fly-by-night companies that had taken money upfront from consumers and not delivered on their promises.

Debt settlement companies that have weathered the “No Advance Fee” regulation and have switched to a program that doesn’t charge for settlements upfront shows that they are putting consumers first. I would caution shoppers in need of a debt settlement options, to be wary of companies that are using workarounds from the new rules, such as requiring an “educational fee” in advance or tout an attorney network to settle their debts. In the case of attorney networks, they usually just argue with creditors that balances are wrong and delay payments to those creditors.

Regardless of who you choose, check out reviews and testimonials from people that have used specific companies to settle their debts. Get a fellow consumer’s insight and make sure that the company you choose adheres to the new FTC rules.


  1. By Salley Saver, February 23, 2019

    I always check out the testimonials posted by users of any product or service. The best way to decide a company or product will work for you or not, is to browse through the comments posted by the existing consumers.

  2. By John Dough, February 23, 2019

    I agree with sally, looking at and reading reviews and comments about products or services is a good way to get a feel for the satisfaction others users experience. By far one of the better uses for the comment sections on articles.

  3. By Ivan Sylvester, February 23, 2019

    Well done FTC.

    There is a lots of debt relief or debt consolidation scams outside there.

    Ftc should clean those.


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