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Debt Settlement Consumer Protection Act Becomes Law in Illinois
A new law requires debt settlement companies to register with the state and to lower initial fees charged to consumers.

The Debt Settlement Consumer Protection Act was introduced after Illinois Attorney General Lisa Madigan said her office received a massive amount of phone calls about being ripped off by companies that promise to work with consumers' creditors and promise to eliminate a portion of each consumer's debt. Madigan says many of the companies were charging large portions of money up front. They would then tell consumers not to pay their bills, leading to late fees, collection and ultimately bankruptcy.

According to a recent report by the U.S. Government Accountability Office, many debt settlement companies provided "fraudulent, deceptive or questionable information" to their customers.

Besides prohibiting false or misleading statements in regards to their services, the law limits upfront fees charged by debt settlement companies to $50 and limits settlement fees to 15 percent of the savings made by the consumer. The companies must also register with the Illinois Department of Financial and Professional Regulation.

Madigan says people seeking help with their debt should see a credit counselor. www.nfcc.org.

(Illinois Radio Network)
08 04 10 by Newsroom
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