Question: Can debt settlement companies charge upfront fees?
Answer: Any for-profit debt relief company (that includes debt settlement companies) who uses telephones to sign up customers (either through inbound or outbound calls) cannot charge upfront fees. They can’t charge a fee until they have successfully negotiated a settlement, the creditor and the customer agree to the settlement, and the customer makes a payment on the settlement. Even then, the settlement company can only charge a fee for the debt that’s been settled. The settlement company can’t front-load its fees by charging for all the settlements once the first debt has been settled.
This rule only applies to for-profit debt settlement companies and debt settlement companies who lie about their non-profit status, but does not apply to some for-profit debt settlement companies who do face-to-face meetings with their clients.
