Policy Matters testifies in defense of Ohio Debt Adjusters Act
Posted October 03, 2017 in Press Releases
In 2004, the Ohio legislature passed the Ohio Debt Adjusters Act to protect Ohioans from unscrupulous debt settlement companies that claim to help people get out of debt, but often end up harming them even more. Senate Bill 120 aims to roll back many of the ODA’s protections. Today Policy Matters Ohio submitted testimony to the Senate Insurance and Financial Institutions Committee opposing the bill.
Many for-profit debt settlement companies prey upon people struggling with unmanageable debt, according to Policy Matters Policy Liaison Kalitha Williams. They mislead consumers, claiming to have special relationships with creditors, but meanwhile, there are other, safer options consumers can use to pay down their debt.
“In many cases, consumers default, and find themselves in worse shape than before they involved the adjuster,” Williams said. “Some end up filing for bankruptcy, the very thing they were trying to avoid…Few consumers actually complete the program but many pay thousands of dollars in fees, and accrue more debt than before they engaged the debt settlement company.”
The ODA caps how much adjusters can charge consumers. It prohibits debt adjusters from accepting more than $75 for initial consultation fees; charging more than $100 annually in consultation fees or contributions; or collecting more than 8.5 percent of the amount paid by the debtor each month or $30, whichever is greater. Senate Bill 120 would remove these protections.
“This legislation is part of a national effort to remove fee caps,” Williams said. “It has been introduced in Ohio on four other occasions and in several other states that have fee caps. Consumer advocates across the nation have stood up to for-profit debt settlement companies and called on state legislatures to uphold fee caps and protect consumers. Legislation, similar to SB 120, has been rejected in state legislatures in Florida, Washington, Connecticut and Louisiana.”