Debt Management Service Providers
It is extremely important every individual understands their rights if they are considering using a debt management service provider. There are a lot of different companies offering a wide range of services. The purpose is to help consumers manage their debts. All of these companies claim they can provide assistance with any issues regarding debt management. Understanding the rights of the consumer is a critical step in the process and the claims these companies have made regarding helping with issues concerning debt management. These types of businesses are referred to as DMS or debt management services providers. They specialize in paying off and budgeting consumer debts.
The Specifics of Debt Management Services
The technical description of a debt management service provider is a company offering assistance to consumers to budget their debts so they can be paid off. It is critical for the consumer to understand their rights prior to making any agreements with any company claiming they can provide assistance with any issues regarding debt management.
The Ways a DMS Provider Helps Consumers with their Debts
There are several ways a DMS provider can assist with consumer debt. They can help negotiate with the creditors on behalf of the individual, potentially acquire a lower rate of interest through negotiations, more preferable terms or a lower payment each month. Once the DMS agency has procured lower monthly payments, the individual must make these payments to ensure they benefit from the better terms.
Locating a Licensed DMS Provider
All DMS providers in the state of Maryland must have a license from the Commissioner of Financial Regulation. Consumers should not work with any DMS agency that has not been licensed in Maryland.
The Debt Management Services Agreement
Once the individual has decided to use the services offered by the DMS provider, an agreement for debt management services must be signed by the DMS provider and the individual. The law requires important provisions in the agreement. These provisions include:
* The name, phone number and address of both the individual and the DMS provider
* The license number from Maryland Debt Management Services for the DMS provider
* The cost and description for the services being provided by the DMS provider
* The monthly fee of the DMS provider may not exceed $50 per month
* A one time, initial consultation fee may be charged by the DMS provider
* A monthly $8 fee per creditor may be charged by the DMS provider not to exceed $40
* The credit rating and credit scores of the individual may be impacted due to the disclosure stating an agreement is being signed for debt management services with the DMS provider
* A notice stating the individual has the right to rescind the agreement any time they choose. Rescind means the individual may cancel the agreement and no longer be required to send the DMS provider payments
* A list of creditors the DMS provider does not expect to participate in the program's payment plan created by the DMS provider
* A payment schedule for the individual must be given to the DMS provider. This includes the due date and amount of each payment
* The DMS provider will hold the name and address for the financial institution prior to sending the creditors these payments
* The DMS provider will disclose they have a surety bond in case Maryland law is violated causing the individual to be harmed
* All prohibited practices
A DMS provider may not:
* Purchase any of the obligations or debts
* Provide credit or lend money to the individual
* Obtain a security interest or mortgage in any property owned by the individual
* Require a voluntary contribution from the individual for any services provided by the DMS provider
* Make any deceptive, misleading or false statements regarding the services of the DMS provider.
* Structure any agreement that may result in the individual owing a higher amount for the principal or the amount of the original debt not including interest than when the agreement was originally signed
* Offer the individual compensation, rewards, premiums, bonuses or gifts for referring a potential customer or signing the agreement with the DMS provider
* Provide or charge for any insurance
* Submit a proposal to any of the individual's creditors to decrease the amount owed unless the individual determines they will benefit from the compromise and provide the DMS provider with written approval
If the individual signs a plan to consolidate their credit card debt into one payment with a DMS provider, they must not attempt to open a new credit card or apply for any additional credit. The individual must make the payments to ensure their debts are paid off and stay with their budget despite the fact it may appear becoming free of debt will take a long time. If there is a good or a bad change in the financial situation of the individual, they must contact the DMS provider to discuss any possible impact to the plan due to these changes. The payment amounts should be compared on the quarterly statement provided by the DMS provider to the creditor's monthly statements to make certain the payment amounts match. For more details please visit https://www.consumerfinance.gov/ask-cfpb/what-are-debt-settlementdebt-relief-services-and-should-i-use-them-en-1457/.
The regulatory agency for Maryland is the Commissioner of Financial Regulation. This agency regulates and licenses debt management service providers engaged in business with the residents of Maryland. If the individual has any issues with a DMS provider, this is the first company that should be contacted to resolve these issues. If these issues are not able to be resolved, the individual should submit a complaint to the Commissioner of Financial Regulation in writing.
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