National Consumer Protection Week: Debt Settlement Awareness

Debt can be a major source of stress and financial strain. In fact, the average Vermonter has nearly $10,000 in credit card debt, according to the Burlington Free Press. For National Consumer Protection Week, we’re sharing important information about debt settlement programs.

Helpful services

There are free services that can help you settle your debt. You can find some resources at VTLawHelp.org.

Additionally, you can work directly with your creditors to negotiate a debt settlement without using a third party. The CFPB has great step-by-step information about how to do this here. There are also nonprofit debt settlement services you use instead of using private, for-profit companies that can come with risks.  Local Community Action Agencies are a great resource for free advice too.  

Be careful in dealing with for-profit debt adjusters

If you choose to use a for-profit debt settlement option, it’s important that you use caution. These private, for-profit businesses may offer to settle your debts for less than what you owe by working directly with creditors.

The Federal Trade Commission provides the following cautions:

“You should be aware that “creditors have no obligation to agree to negotiate a settlement of the amount you owe.  There is a chance that your debt settlement company will not be able to settle some of your debts — even if you set aside the monthly amounts the program requires.

“Debt settlement companies also often try to negotiate smaller debts first, leaving interest and fees on large debts to grow.”

Because “debt settlement programs often ask — or encourage — you to stop sending payments directly to your creditors, they may have a negative impact on your credit report and other consequences.”

Avoiding scams

There are many debt settlement scams out there. Any company offering debt settlement or debt adjustment services in our state must be licensed with the Vermont Department of Financial Regulation.  You can check a license online by searching the business name on nmlsconsumeraccess.org.

Find out more

You can learn more about debt adjusters on our website:https://ago.vermont.gov/consumer/money-and-credit/debt-adjusters/

If you have any questions about next steps, you can always contact the Consumer Assistance Program at 1-800-649-2424. 

You can take action to tackle your debt, but be cautious of organizations that may try to take advantage. You have the power to protect yourself and your finances.