Debt-Settlement Bill Riles Critics

September 3, 2013
Columbus Dispatch  

The Ohio legislature is tussling over a bill that would allow the debt settlement industry to impose higher fees in the state. Some groups that fought against the payday lending industry are now trying to block House Bill 173, which supporters say would bring clarity to Ohio laws for companies that offer to settle consumer debt.

Brian Tawney of the American Fair Credit Council says the measure would allow legitimate debt settlement providers to operate in Ohio. Linda Cook, senior staff attorney for the Ohio Poverty Law Center, argues that the industry already is permitted to operate in Ohio but must do so under state fee caps: either 8.5 percent of the amount of debt payments by the consumer each month or $30.

Critics of the bill say it would allow the industry to charge desperate consumers higher fees. Most debt settlement plans have consumers stop payments and instead place money into an account that the settlement company uses to leverage settlements with creditors for less than what is owed. The Center for Responsible Lending (CRL) warns of high fees charged by these settlement firms, noting that many clients are left with unresolved debts. “Any savings achieved on one or two settled debts is wiped out by the growth of debts that are not settled,” Ellen Harnick, CRL's senior policy counsel, told federal officials in 2012.

Abstract News © Copyright 2008-2013 INFORMATION, INC.
Powered by Information, Inc.

Stay Updated

Join the fight against predatory lending. Enter your e-mail to sign up for breaking news, action alerts, and CRL's original research.

   Please leave this field empty

Help Us End Predatory Lending

Predatory lending destroys family wealth, and preys on our most vulnerable communities. You can help us end abusive lending practices by donating to CRL, or by sharing our work with others.