As you may know, Debt Management Guys offers both debt management credit counseling services as well as debt settlement to help people get out of debt and back into financial independence.

However, there is now pending legislation whose sole purpose is to eliminate the debt settlement industry. This will force debt settlement companies to have zero incentive to help people settle their debts and force more people into bankruptcy which ruins your credit score far worse than credit counseling or debt settlement.

A few days ago? Senator Schumer (D-NY) submitted his (and Senator McCaskill?s) debt settlement legislation (S.3264) as an amendment to the Restoring American Financial Stability (RAFS) Act of 2010, the financial reform bill now making its way through the Senate. The amendment has been given the designation Amendment No. 3960.

A preliminary review of the Amendment reveals that the most damaging provisions of the bill – those relating to fee regulation remained intact despite recommended changes. Monthly fees in any amount remain prohibited, and the percentage of savings was revised insignificantly, from 5% to 10%, which is of course still untenable. More specifically, if proposed Amendment 3960 is passed through the RAFS Act of 2010, debt settlement providers will only be allowed to charge (a) a $50 set up fee (fully refundable to consumers if programs are canceled inside three months; 50% refundable if cancellations occur thereafter prior to settlement), and (b) 10% of the amount consumers are saved, and only then on settlement and payment by creditors.

Additionally, if 3960 is passed, companies that are able to stay in business, if any, will face unlimited punitive damages in civil causes of action. This means juries will be free to impose limitless amounts of damages on companies in their discretion.

Finally, although debt settlement providers shall not be allowed to charge any monthly fees, providers are required under 3960 to create and provide monthly statements for all consumers enrolled in their programs. These free monthly statements must include ?account balances, fees paid, settlements completed, remaining debts, and any other term considered appropriate by the Federal Trade Commission.

In short, this bill, developed in secret over the last 9 months and now being slipped into other legislation without even a hearing is designed with one purpose in mind: to eliminate the debt settlement industry. This is an extreme and ridiculous law.

What we need from you, is for you to step up your calls to Senators urging them to oppose Schumer-McCaskill Amendment 3960. If you have consumers who want others to have the same access to debt settlement programs that they have had, and if they wish to contact Senators, as well, we need their input delivered to Senators, as well.

The next few days will be critical to this effort, so keep up the great work. It only takes 5 minutes to call each of these senator offices and express your disapproval of this ridiculous law that would crush the industry into not being able to help people settle their debts like they have been for years and years. Not only that, but the banks historically earn more money from debt settlement than bankruptcy.