Debt Settlement Company Lays off 120 Employees in Response to New Law

Industry analysts have predicted that many debt settlement companies would reduce operations or fold entirely. With the new Telemarketing Sales Rule that went into effect October 27, 2010, debt settlement companies may no longer collect an upfront fee for "promising" to settle a client's debts. Instead, they may only receive a fee when the client successfully settles a debt.

Freedom Financial Network is just one of many debt settlement companies that are laying off employees as part of a restructuring or downsizing of operations. It is expected that a substantial percentage of debt settlement employees will lose their jobs in late 2010 and early 2011.

Of the 120 positions at Freedom Financial's Sacramento office that are being eliminated, about 20 may be considered for positions at their San Mateo office. The Sacramento office opened in 2004 when the debt settlement industry began flourishing.

This may just be the tip of the iceberg at Freedom Financial and other debt settlement companies that are scaling back operations. Since client attrition is so high with these companies, it is likely that additional layoffs are on the horizon.

Freedom Financial is still accepting new clients. Other debt settlement firms such as Clear Debt Solution have stopped adding new clients. The trend in the debt settlement industry is either restructuring on a massive scale for those who have the financial means to continue, or a white flag for those firms who relied entirely on the upfront fees for their very existence.

For those debt settlement employees that are laid off, it is unlikely that they will find a job with another debt settlement company. While some may incur financial distress due to unemployment, it is unlikely that any of them would consider signing up to a debt settlement plan given their inside knowledge of the woes of the industry.

Freedom Financial does still have some 480 employees at its San Mateo and Phoenix offices. Those that are still employed should consider themselves temporarily fortunate, and yet on notice at the same time. We have expected thousands of layoffs in the debt settlement industry. More layoffs are expected as firms scramble to remain profitable with the new consumer-friendly restrictions.

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Related Information:
Freedom Debt Relief, Freedom Financial Network defrauded customers, sued by New York.
Freedom Debt Relief/Freedom Financial Network must pay $800,000 in restitution to Washington clients.
Forum-How has Freedom Debt Relief/Freedom Financial Network affected you?