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Legislation Targets the Debt Settlement Industry – Davis Enterprise

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Legislation Targets the Debt Settlement Industry Davis Enterprise
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By Erika Paz
CalMatters

Before the pandemic, Graciela Gomez relied on two jobs to keep track of her expenses. After losing her part-time job at Macy’s in March 2020, she had to choose between paying off her credit cards or paying her rent. She chose the latter.

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“I didn’t know who to talk to, who to contact. I was ashamed,” said Gomez.

An ad for a debt settlement company appeared on her social media feed, promising to lower her debt. Following the follow-up, she says she received a lawsuit from one of her credit card companies in March. She still fights today.

As California emerges from the pandemic, some residents have some facing crippling personal debt, while many of the state’s wealthiest residents have seen their wealth grow. One of the economic winners is the booming debt settlement industry, which is largely made up of online companies that promise to reduce personal debt by negotiating with banks and credit card companies on behalf of the customer. But consumer advocates point out that these companies often run into financial despair and fail to warn customers of the potential consequences, such as going to court.

Now California lawmakers are considering legislation that would more tightly regulate the industry after largely overlooking personal debt from credit cards and loans pandemic-era legislation aimed at relieving rent and utility debt. The bill revives a perpetual debate in the Capitol about whether alternative financial services — such as payday loans, debt settlement, and credit repair — are financial predators or a necessary lifeline for Californians with little or bad credit.

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The post Legislation Targets the Debt Settlement Industry – Davis Enterprise appeared first on Notesradar.

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