Free Debt Consolidation

In order to provide some protection for consumers from fraudulent free debt management services, the Uniform Debt Management Services Act was put into place by the federal government and has been adopted by the majority of states in the nation. The Uniform Debt Management Services Act sets forth a set of regulations that these debt management companies need to abide by in order to operate in the various states. The reason that this act was put into place is because there were many consumers who were taken advantage of by certain companies that claimed great results but then did not follow through on those claims. The fraudulent companies would also hide fees from the consumer until a contract was put into place, or they would end up going out of business, leaving the consumer stripped of their money and with no resolution with their creditors. One of the mortgage brokers NZ who also helped the first home buyers with property management provided the following information.

There are three basic parts to the Uniform Debt Management Services Act. The first part requires the companies to register their business in every state in which they operate. If they operate in multiple states where the requirements are approximately the same, the company might be allowed to show proof of registration in another state and be granted registration in the new state as well. Part of registration under the Uniform Debt Management Services Act is proving that there is an insurance policy against fraud in place. This policy is for, at a minimum, a quarter of a million dollars to ensure that the consumers are protected.  

The second part of the Uniform Debt Management Services Act is that the company has to give full disclosure to the clients. They cannot hide any fees or leave any services undisclosed to the clients. In addition, the company must offer counseling to clients from a certified credit counselor to determine if the debt management services are the right solution for that person’s credit problems. The funds that are collected by the company must be held in a trust fund account so that they cannot be touched by the company except to pay off the person’s debt.

Finally, the Uniform Debt Management Services Act requires that enforcement must be in place to make sure that the companies follow through on the rules mentioned above and the services that are in the contracts with consumers. The companies must disclose to consumers every transaction that occurs between the company and creditors so that everyone is on the same page and there are no surprises.