13 Red Flags for MN Debt Consolidation Firms |
By Lacy Gallagher on October 20, 2011
.jpg.aspx?width=75&height=75) Chapter 332B of the 2010 Minnesota Statues defines the legality of debt settlement services in the state. Thirteen legal prohibitions for debt settlement providers are defined in Minnesota law, so should be major red flags if encountered during the search for a legitimate debt consolidation provider. Debt consolidation is the process of combining several monthly bills into one monthly payment to a debt settlement organization, which in turn provides agreed upon amounts to the debtor’s creditors each month with the goal of assisting to make timely monthly payments.
Prohibitions:
1. Engage in any of the 16 activities listed under 332A.14.
2. Imply in ANY way that ANY debt will be settled before the participating creditors have responded to the agreement presented by the debt settlement service.
3. Give false impressions of the timing involved with the negotiations with the creditors.
4. Represent in ANY way:
a. Fees, interest and all other charges will not continue prior to the debt being settled.
b. Wages and bank accounts are not subject to garnish.
c. Creditors will not continue to contact the debtor.
d. The debtor is safe from legal action.
e. The debtor will avoid tax consequences for any waived debt.
5. Any agreement, written or oral, that limits or terminates the debtor’s right to communicate with creditors or the creditor’s right to contact the debtor.
6. Exercise or attempt to exercise power of attorney following the termination of the agreement.
7. Infer AT ALL that debt settlement services will have no effect or a positive effect on the debtor’s credit score.
8. Challenge the debtor to the creditors without formal written agreement from the debtor.
9. Report any false claims about the creditor’s rights regarding the collection of debt.
10. Mislead debtor to believe that debt settlement service provider will be able to negotiate a more beneficial agreement with the creditor than would be possible for the debtor to negotiate alone.
11. Providing legal advice or services from a person who is not authorized to practice law in Minnesota.
12. Falsely imply that the company or service provider is authorized to provide legal advice or perform legal action.
13. Lead a debtor to believe that a payment is settlement of the debt to the creditor without the debtor receiving a certification from the creditor that the payment fulfills the settlement of the debt. |
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