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Debt Settlement

Starting in January 2014, Louisiana will require companies offering debt settlement services to be registered with the state. The Attorney General’s office reviews their applications. Provider must post a $50,000 bond or for the total amount of the client funds managed for the past six months, whichever is greater. These funds are reserved as compensation in the event the provider fails to disburse the funds properly for the purpose of the consumer’s debt settlements.

Officers in these companies are not allowed to have any previous convictions relating to violations of federal or state securities law. Lastly, debt settlement companies are required to provide the consumer with the estimated time it will take to resolve their debt settlement issues and provide the estimated costs of the services.

Required Consumer Information

If a Louisiana debt settlement service requires a deposit to an account for the purpose of disbursement to creditors, the consumer must maintain the ability to withdraw funds without any penalty other than the amount owed to the provider for its services. But prior to accepting any of these funds, the settlement company must do its homework and ensure that the consumer is financially able to make the agreed to payments of the settlement plan.

Debt settlement companies are required to provide to the consumer, in writing, information regarding alternative solutions if they are not suitable for a debt settlement plan. They must also provide information on how credit scores and finance charges are affected by choosing debt settlement options.

Back To The Basics

Whether the consumer chooses a debt settlement company or decided to approach creditors on their own, they should always keep in mind some basic information when looking at this debt payment alternative. If the consumer chooses this route, should get the terms in writing. This ensures there are no questions surrounding the expectations of the agreement.

Credit Counseling

Millions of people have turned to credit counselors to help them navigate their way out of debt and rebuild their credit. The key is to arm yourself with knowledge about what credit counseling is and then find a reputable organization you can trust.

A credit counselor’s job is to gather as much information about your financial situation as possible, use it to perform a thorough budget analysis – which is often free – and suggest a sensible, tailored plan that you can live with. The goal is to help you make a well-informed decision about how to move forward.

That often means making major budgetary changes, enrolling in a debt management plan, filing for bankruptcy or some combination. A good credit counselor will also have your long-term future in mind – setting you up with a retirement and/or college fund, for example.

The Federal Trade Commission offers tips on choosing a credit counselor and you can also refer to your area’s Better Business Bureau and your local consumer protection agency in Louisiana to check on complaints lodged against various agencies.

A Few Things To Keep In Mind

Be prepared to get honest – not just about your outstanding debt, but also your personal spending habits and monthly expenses. It’s the only way a credit counselor can give you an accurate analysis and viable debt relief plan.

If you do choose to enroll in a debt management plan, your credit counseling agency can handle that as well. They are experienced in negotiating deals with creditors. Once that happens, you would make one payment to your credit counselor and they would distribute the funds to your creditors.

According to Louisiana law, credit repair services no longer have to obtain an operating license but they do have to post a $100,000 surety bond with the Attorney General’s Office to do business in the state.

Credit counseling agencies charge different fees for debt management plans, but the credit counseling foundation suggests it should cost no more than $50 to set up a plan and no more than $25 per month to maintain it.