MD Debt Settlement Problems

Due to the overall problems with debt settlement companies for Marylanders who have debt problems, you should consider filing bankruptcy in MD with a cheap bankruptcy lawyer in Maryland. 
 Consumers affected by the current economic downfall are facing increasing debt and some are seeking
alternative solutions to relieve their financial burden Marylanders hoping to reduce some of that debt are
bombarded by advertisements for debt management plans and debt settlement plans. Some ads make questionable claims that consumers can reduce their debts by as much as 50% to 70%. Consumers should not assume that they will be able to enjoy the claimed savings.
The Office of the Attorney General recommends not signing up for either debt management or debt
settlement plans unless consumers first undergo credit counseling from a reputable credit counseling agency.
Counseling may provide the consumer less expensive and more effective options to eliminate their
debts. A certified credit counselor can help consumers understand their options, create a budget, and offer advice on
spending habits. Debt management companies, which are required to be licensed in
Maryland, allow consumers to consolidate their debts into a single monthly payment, which is then
distributed to the consumers’ creditors. These companies negotiate with creditors to waive late fees and
lower interest rates. Debt management companies must also provide consumers with an education program and explain consumers’ alternatives for addressing their debt situation, including budgeting or filing bankruptcy. However, under a debt management plan, a consumer is usually required to pay the full amount of the debt plus the debt management company’s fees.
Debt settlement companies are not licensed and offer plans that may be riskier than those of debt management companies. Debt settlement companies often advise their clients to stop paying their creditors and instead deposit monthly payments into an account so an amount can be built up that would allow the settlement company to negotiate a settlement with creditors.
As of October 2010, debt settlement companies ca no longer charge fees until they have settled the consumer’s debt, due to a regulation issued by the Federal Trade Commission. Under the FTC Rule, the debt settlement company must explain to consumers important information such as how long it will take to see promised results, the cost of the debt settlement
plan, and any negative consequences that could arise from using debt settlement companies. The FTC Rule
specifies that fees for debt relief services may not be collected until:• the company successfully renegotiates, settles, reduces, or otherwise changes the terms of at least one of the consumer’s debts;
• there is some sort of written settlement agreement
between the consumer and the company, and the consumer has agreed to it; and
the consumer has made at least one payment to t he creditor as a result of the agreement negotiated by the debt relief company.
In addition, the Final Rule allows debt relief companies to require consumers to set aside money for payment to
creditors in “dedicated accounts.” Debt settlement companies may only require a dedicated account if:www.oag.state.md.us/consumer. Learn how to stop a Maryland Foreclosure or find out how you can stop a Maryland wage garnishment should the need arise.


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