The increasing amount of consumer debt in U.S has triggered to a huge need of debt relief solutions that common folk can afford. The urgency of the situation has prompted to the rise of a massive number of debt relief companies who are operating in the country and helping debtors getting out of debt. There are both for-profit as well as non-profit debt relief firms. But, there are lots of unauthorized firms that are doing business in this domain without legal ways. Therefore, debt relief frauds are also spreading rampant. In order to curb this trend, FDCPA has laid down some FTC guidelines. Companies need to follow these guidelines if they want to run consumer service in the fair way.

According to FTC guidelines, debt settlement or debt consolidation companies should not make any upfront charge to their consumers. In the past debt relief firms used to ask hefty payment from the debtor if anybody wanted to take up their service. This is a very important step taken by the FTC to bring an air of transparency and accountability in financial transaction between clients and debt settlement companies.

No debt relief company can henceforth promise a debtor to reduce any amount that they will not be able to fulfill. It is expected that the firms can make promise on the basis of their past track record. If they have proven record of settling debt of the debtors in less than they owe, the settlement company could give their clients an idea of how much debt they can possibly reduce. However, the settlement firm should tell them only on the basis of their general performance not on the basis of any particular outstanding example.

A debt relief company can charge for their service only after settling or reducing debt as agreed. However, some companies take a negligible consultancy fee along with the span of their service. The firm should always work by keeping close contact with the debtors and creditors. If any company is found violating the rules, consumers can take legal action against them.

When a consumer makes his payment to the account of a debt settlement or consolidation company, it is the responsibility of the company to send the paid amount to the creditors on due time. Sometime, intermediary agency keeps the payment in their account or pay later. They sometime do it to satisfy their payment. But, it hurts the credit status of their client.