All creditors follow the debt laws so as to stay away from any legal obligations as well as keep their money protected. If you are into such business or into debt collection, then it is essential that you have everything documented and maintain a proper record of the same. These documents not only involve the loan contract but all communications, letters, payment schedule and others. Most importantly you must have a written agreement of the debt.
All savvy businesses know how important it is to have the written approval of the customer for all debt settlements, collection and consolidation as well. However, according to the new Rule, there may be a few exceptional situations when the oral agreement of the customer may be recognized. For example, when a creditor offers a very encouraging settlement that may be available only for a limited time, an oral agreement of the customer may suffice.
In this context it is essential for you to keep in mind that:
- It is very risky to rely only on an oral communication
- The best and wisest thing you can do when you get an oral agreement of the customer is to write a note about it to that effect
- Keep it on file along with the written agreement of the customer
- It is also advised that you follow up with your customer in writing.
However, according to the debt laws such oral agreements should be used rarely. Typically, members of the debt industry are very careful not to create any pressure on the customers to act. They take enough time to think over their decision just as the customers do before taking on any loan, whether it is from a traditional bank or any other private organization and even when they choose any debt relief option from Nationaldebtreliefprograms.com or any other.
Follow the best practices
Apart from adhering to the basic compliance requirements of the new TSR, if you are into debt relief services you must also follow the best practices so that you can help your business as well as your customers. A few of such best practices to incorporate are:
Screening the prospective customers thoroughly for suitability – This is essential because debt and debt relief programs are not suitable for everyone. For example, those people who have too many dents in their name and very few assets then according to the law they may not be suitable for any other debt relief other than filing for bankruptcy.
Setting up reasonable written procedures – This practice will ensure that each of your customers is suitable for a specific program. However, what is reasonable for the process will largely depend on the type of service chosen by the customer. It will also depend majorly on the end results you promise. The bottom line is that both of you must have a good enough reason to believe that the agreement that you sign up is capable of making the entire process smooth and all the payments associated with the program are likely to be completed successfully.
Consider the situation: To make sure that your business is safe and in heading towards the right direction and is in compliance with the debt laws, you must consider the situation during the sign up process. It is also required that you stay abreast with the latest developments of the law and accordingly train and supervise your employees if any. This will make sure that all the procedures followed by your business according to the rule. This will also ensure that your staff does not misrepresent any facts and service to the potential customers especially if you pay commission to your staff based on the number of people they sign up for your program.
Keep customers in the loop: You must monitor your staff, all procedures as well as your customers carefully to make sure that the procedures are reviewed and updated periodically. This will also help you to keep your customers in the loop and keep them updated on the status and progress of the processes that may include negotiation, all important communications and others. Make sure that you as well as your customers know about any changes in the policies especially those that may affect the length of the process and the cost of it as well.
Establish better communication: You must let your customers communicate with you as well as their creditors openly if you offer any debt relief services to them. Make sure that they not only contact but are also contactable as well.
Tax consequences: According to the law, debt and debt relief also has some specific tax consequences. As a practice, you should tell your customers about such tax consequences of the programs. For some people, after using a debt relief service, it could have tax consequences depending on the financial condition of the customer. The amount of money saved can be considered taxable income.
If you want to know more about such compliance with the rule you will have to look up for more information on different websites that are dedicated for different laws such as:
- Debt Laws
- Debt Relief Services Laws
- Telemarketing Sales Rule
- Telemarketing and Consumer Fraud and Abuse Prevention Act
- Credit Card Interest Rate Reduction Scams
- Settling Of Credit Card Debts and much more.
Moreover, if you have any questions regarding debt laws, TSR and debt relief services, you can contact reliable sources such as:
- Division of Financial Practices
- Federal Trade Commission and
- Bureau of Consumer Protection.
Wrapping it up
The FTC is on the constant lookout of ways in which unfair, fraudulent, and deceptive business practices are prevented in the debt marketplace. It is for this reason that they bring up new amendments to the debt laws from time to time. Moreover, they are always available for providing relevant and useful information to the consumers so that they can spot such unfair practices, avoid and even stop them. A consumer can file a complaint against any issues into the Consumer Sentinel Network to ensure that the debt laws are strictly followed.