How Debt Consolidation Programs Have Evolved
Debt consolidation programs have had something of a checkered history for consumers in the United States. They have undergone an evolution of sorts, with perceptions changing and options changing for those in need of credit relief. Today’s programs are more nuanced, and they are readily available to a wide range of people. Today, consolidating debt is a relatively easy process for those who have multiple debts stretched across a large number of different creditors. Understanding the various options is the first step to coming away with a better solution at the end of the day.
Debt Consolidation of the Past: High interest rates and clumsy processes
In the past, debt consolidation was not easy. It has not been a pretty process, and it has, frankly, been cumbersome for many people. The interest rates were not all that favorable in the 1980s but things started to improve by the 1990s. This led many people to consider various alternatives including debt settlement and working out payment plans with creditors. Without the nice incentive of low interest rates to draw people in, the debt consolidation companies did not have a ton to offer individuals with overwhelming debt issues.
The cumbersome process was also a concern for people who might have otherwise taken out a consolidation loan.The application process was long. Much of it was done the old-fashioned way. You had to submit forms and wait. This is not a good thing for people who have debt problems right now. This is one of the things that drove people away from this industry and helped to create a negative conception of the industry among many of the old consumers
The Invention of the Internet and Debt Relief Companies
The net has been a wildly important thing for a number of different industries. One of those industries has been the financial world. Everyone knows how traditional banking has benefited from online resources, but a similar vein applies for debt consolidation companies. In the 2000s, people were able to go online and fill out applications. They were able to research programs and figure out the best possible away to approach their debt. This provided consumers with the power and made the process much more efficient for everyone involved.
Competition Among Debt Relief Companies Breeds Lower Interest Rates
Many of today’s debt consolidation programs offer interest rates that make it possible for people to actually get out of debt. They offer rates that are, at the very least, a few interest points lower than what you might pay to your original creditors. This is largely because of the competition brought about by the internet. More companies are in play, so they are looking to do things to bring in more customers. The lower rates bring about tangible savings. These tangible savings give people hope that they can relinquish debt even if they have been in over their heads for a long time.
Debt Relief Help Programs Accompany the Good Rates
Simply providing the best interest rates is not enough for many debt consolidation programs today. They also have a debt counseling element that is a very important part to the process. Debt counseling is what you would think. It is the process of sitting down with a person and coming up with a plan to get out of debt. It is all about not leaving debt to chance in any way. There is a right answer for pretty much every person on how to best fight off debt. Most of today’s good consolidation companies are adding this as a service and a way to protect themselves as well. Consumers who are willing to buy in to these programs can reap substantial benefits along the way.
FTC Telemarketing Sales Rules Regulating the Debt Relief Industry
In October of 2010 the Federal Trade Commission revised and amended the Telemarketing Sales Rule (TSR) that address the telemarketing of debt relief services. These amendments define debt relief services, prohibit debt relief providers from collecting fees until after services have been provided, require specific disclosures of material information about offered debt relief services, prohibit specific misrepresentations about material aspects of debt relief services, and extend the TSR’s coverage to include inbound calls made to debt relief companies in response to general media advertisements. The amendments were revised to protect consumers from deceptive or abusive practices in the telemarketing of debt relief services.
Programs today are much more tailored to the individual and more closely regulated for legitimacy.
Ultimately the changes that have taken this industry are important and they are tangible. In the past, you would just get a loan, and you’d have to figure it out on your own. It was about moving debt around at a lower rate, but there was no commitment to making sure that people get out of debt on their own. Today’s programs have changed all of that, and they are a viable option for the modern consumer with unsecured debt. Given the way the Internet works and how it has lowered the barrier to entry to this industry, it is likely that more and more programs will arise that give the consumer an opportunity to prosper. That is the name of the game for the modern companies as they respond to always changing and ever-dynamic consumer needs.