Buying on credit seems awfully nice -- especially when you can take as long as you want to pay it off. This kind of thinking, however, gets many people deep into debt.
In 2005, as consumer debt was ballooning into crisis proportions, no federal law regulated credit counseling agencies -- the companies that promised to help debtors pay off their bills. Many consumers didn't know where to turn. Laws varied greatly from state to state, and some states had no laws at all. The National Conference of Commissioners on Uniform State Laws (NCCUSL) took action by creating an act to give uniform rules to all states.
The NCCUSL proposed the Uniform Debt Management Services Act (UDMSA) in 2005. The act provides uniform rules for credit counseling services and debt settlement services. Credit counselors give advice to consumers, whereas debt settlers negotiate a portion of the payment to creditors. Before the act, existing laws between states were wildly different or governed only one part of debt management.
The act gives states guidelines on how to regulate different debt services. State legislators are free to choose what types of agencies can provide what options. States can choose between for-profit and not-for-profit, taxable and tax-exempt firms. Using requirements specified in the UDMSA, states can decide which services firms can offer. Consumers, meanwhile, can take comfort in knowing these firms are subject to more rigorous and uniform regulation.
In this article, you'll find out why the NCCUSL thought it was important to pass this act, along with a few of the act's highlights and what they might mean for you.