Oregon Debt Consolidation Companies

There are many debt consolidation companies that are only out to take your money. Sure, they'll do what they say they'll do, by sheer literal language, but you may not be getting what you were hoping for, and you'll end up with a worse credit rating than if you had handled it yourself in some circumstances.

Unlike most financial institutions, not all debt consolidation companies are under as close a scrutiny as they need to be. Rules for what they do are sketchy, if they exist at all, in most places because no one saw the kind of crush that's ended up coming because of the bad economy coming. It used to be you might see one company on TV commercials once a week; now it seems like you see those commercials at least once an hour, if not more than that.

Oregon, one of those states suffering from high unemployment, decided to try to do something about it, as more and more of its citizens were getting duped by nefarious companies. The Oregon House of Representatives created a law in favor of requiring debt management agencies to register with the state Department of Consumer and Business Services. That law also limits fees that these agencies can charge, caps the amount they're allowed to take for settling people's debt, regulates the type of advertising they're allowed to do, and adds some other consumer protection language.

These protections were needed because some debt consolidation companies had fees as high as $1,000 just to be represented, taking it out of money they wanted their potential customers to pay them to help pay down debts later on. Also, on the back end, if they were able to make deals with some of your creditors (after trashing your credit), they'd take another big chunk from you.

This bill set a one-time maximum of $50 to open a file; reasonable costs for counseling up to $50; and up to 15 percent of funds consumers deposit in trust accounts, not to exceed $65 per month. And debt consolidation agencies can't take more than 7.5% of the difference between the original debt and the amount paid in settlement at the end of the process. This last point is crucial because the amount of debt is different than the amount charged off, which includes interest and other fees, and that would have resulted in a much bigger kickback to these companies.

Other states will be following suit, along with some assistance coming from the federal government. Sometimes, we do need help protecting ourselves from someone who's saying they're going to help us.