A new bill introduced in California would prohibit debt settlement providers from charging any fees in excess of 15% of the amount of consumers’ savings as a result of any settlement.
The Debt Settlement Consumer Act (Senate Bill 708) was introduced in February 2011 by State Senator Ellen Corbett (R-San Mateo), who headed the California Senate Judiciary Committee that stopped a proposed regulation (Assembly Bill 350) last year that had drawn support from the debt settlement industry. The bill is supported by the Center For Responsible Lending and the Consumers Union.
Besides limiting the timing and percentage of the fees that may be charged, the proposed new law contains extensive new requirements for licensing and reporting, and would impose substantial penalties on individuals and companies that fail to comply with the Act.
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