Our piece on The Scourge of Debt Settlement Companies, warning of the dangers to borrowers of companies that propose to settle debts for less than borrowers owe, but actually cause immense harm to those that use them, was echoed in a recent resolution passed by the National Black Caucus of State Legislators.
A RESOLUTION ON PROTECTING MINORITY COMMUNITIES FROM DEBT SETTLEMENT COMPANIESpoints out the many negative consequences of engaging with debt settlement companies, including the impact on individual credit scores and the subsequent cost of credit, the fees that such companies charge, the very low likelihood of successful outcomes and the tax implications which go along with forgiven debt.
The resolution states that:
“….. these companies often disproportionately operate in minority communities, where individuals and families often have fewer resources to draw on when they come under financial pressure.”
The resolution calls for support for efforts at the state and federal level that ensure debt settlement companies are subject to basic consumer protections, for states to examine legislation restricting debt settlement companies from themselves offering unsafe or unsustainable loans to consumers, and encourages the federal government to conduct a comprehensive review of its oversight of debt servicing companies.
SOURCE: National Black Caucus of State Legislators