You may have heard about the “Obama debt relief plan” in the news lately. Many people assume this refers to the plan President Obama is working on to help fix the economy. With the unemployment rate near 9%, many Americans are looking for help when it comes to getting out of debt both individually, and as a nation. Obama’s economic recovery plan has been in the works for nearly 2 years, working on ways to address the nation’s debt problem. Many people don’t realize the plan to relieve the nation’s debt is a government issue; the debt of an individual is not. The government bailing out banks was done to prevent the economy from collapsing; whereas the collapse of an individual’s finances isn’t going to impact the overall economy.
What Is Really Going On
What you may not know is that unscrupulous debt relief agencies are claiming the plan is meant to bail out individuals that are in significant debt. These companies are promising to erase your debts completely using, what is also being called, the “credit card debt relief act”. These boisterous claims are coaxing people into paying for a service that doesn’t exist. It is meant to seem like a new debt relief service, when it is merely the same services they have been providing for years. By suggesting the government is ready to bail credit borrowers out of debt just as they have bailed out credit companies, they are bringing in more clients. The truth is, there is no “credit card debt relief act” or “Obama debt relief plan”. These are merely marketing techniques used by dishonest credit counseling agencies attempting to sell services that can leave you in worse financial standing.
The Federal Trade Commission isn’t going to let this scam go easily. Beginning in September, the FTC will require debt relief agencies to disclose information to consumers before any debt settlements can take place. The agencies must disclose (a) how much they charge for their services, (b) the estimated time it will take to get the debts settled and (c) to list any negative consequences that result from debt settlement, such as impact to your credit score or any taxes you may owe on the settled debt. Debt relief agencies will also be prevented from charging up front fees and will regulate what consumer outcomes must be received before the company can get paid for their services. The company will only be allowed to get paid when the consumer has had their debts successfully settled in writing. The consumer must agree to the debt management plan and have made at least one successful payment to the creditors before the agency can charge the consumer for service.