Radio Address: Granholm Alerts Consumers About Debt Relief Scams
In this week’s radio address, Governor Granholm said that on the eve of National Consumer Protection Week (March 7-13), the state is seeking to protect consumers with debt problems from ending up in even more precarious financial situations.
Hello, this is Governor Jennifer Granholm.
You see and hear the commercials on TV and radio. Soothing voices say, “We know it’s tough out there.” “Get out of debt now.” “Debt relief is just a phone call away.” These are all pitches from debt-settlement companies claiming they can get you out of a financial hole. The number of these companies has been multiplying because of skyrocketing consumer debt.
But on the eve of National Consumer Protection Week, you need to know that there’s a big difference between unregulated companies claiming they can settle consumer debt, and state-licensed companies that offer debt counseling and management programs. Warning consumers about the bad guys and making sure there are safe alternatives to resolving consumer debt is part of our continuing efforts to protect consumers and their pocketbooks.
Unregulated debt-settlement companies usually charge exorbitant up-front fees. They hold the consumer’s monthly payments in an escrow account, and the company then attempts to negotiate payoffs with creditors.
Debt-settlement companies will advise consumers to stop paying their creditors. But by avoiding creditors, the consumers’ credit scores will drop dramatically while interest on their debt and late fees keep going up. A number of unregulated debt-settlement companies are simply scams. They disappear after consumers pay them thousands of dollars in up-front fees.
If you need help getting out of credit card debt, there are safe alternatives to unregulated debt-settlement companies. Consumers may find assistance at their banks or credit unions. And there are debt-management companies that must be licensed by the state Office of Financial and Insurance Regulation.
These companies are required to employ qualified debt counselors and offer detailed budgeting and debt and credit counseling assistance. And they employ more than 700 qualified counselors who understand Michigan law regarding debt.
There are a number of ways you can get a list of licensed debt-management firms in Michigan. You can find the information on the Web at www.michigan.gov/ofir. Or simply call toll-free 877-999-6442.
Next week we’ll be observing National Consumer Protection Week in Michigan. The Federal Trade Commission has organized a coalition of groups to provide consumer tips on a wide range of topics, including debt settlement. You can find the tips at www.consumer.gov/ncpw. Here in Michigan, the Office of Financial and Insurance Regulation offers a host of tips for consumers as well.
If you have a problem with debt, educate yourself about the debt-relief options available to you. And beware of debt-relief scams. Consider contacting a firm that is regulated by the state instead. You’ll be glad you did.
Thank you for listening.
