My Personal Finance Blog

The consumer debt settlement protection act came into being after the frauds and cheating cases increased in the business of debt settlement. The option of debt settlement was present in the market for a long period of time but, it actually came into the lime light after the bang of recent inflation. Though this option brings fast reduction in the amount of unsecured loans but still people are not willing to adopt it. The main reason for not adopting this method is that people are afraid of getting betrayed by the fake and illegal firms. These days, many scams and fraudulent companies are operating in the market and it really gets difficult for a person to differentiate between the legal and illegal companies.

These fake companies are bringing dark spots over the business of settlement. Such firms actually work for their own benefit; they don’t have any intention of taking out people from the miserable pool of loans. They guarantee the person regarding negotiating with the lender and also charge the service fees in advance but actually they never bother to contact with the creditor. After some time, they tell the person that the process of negotiation went unsuccessful. At this point, when a person asks them to return the fees which they have taken in advance, they refuse them by saying that it was non refundable. This malpractice has really stopped the people from adopting this method for the elimination of the debts. This situation has really made a rise in the number of bankruptcies that are declared recently. Increasing ratio of insolvency is creating the condition of financial chaos in the economy. In order to stop people from filing bankruptcy, the federal trade commission has established the consumer debt settlement act.

This act was basically invented for the safeguard and betterment of the people. This act mentions that the Settlement Company is not liable for taking the service fees in advance. The company is bound for charging the fees only after bringing some reduction in the amount of their customers’ liabilities. With the help of this act, people are now finding them more secured and safe and that is the main reason why the demand of settlement deals are increasing with each passing day.

Let’s start off with a simple explanation of why fraud costs us all money. Insurance companies employ people called actuaries. They spend their time calculating how many traffic accidents there are likely to be and predicting how much all the claims will be worth in a year. That total is divided among all the policy holders as the premium. It’s all guesswork but they are good guessers. Except that, when thousands of people make false claims, the insurers suddenly find themselves short of money to pay out. What is the result we see? Premium rates go up for all.

How bad is the problem? In New York, the number of suspected cases of fraud has risen by one-third from 2007 through 2009. Across the state, the insurers identified 13,433 probable cases of fraud in 2009 alone. To pay for this, the premium rates rose by an average of 6.3% in 2009. The most common frauds are staging an accident to claim medical expenses. This has caused the average value of each claim to rise to more than double the national average. That’s millions of dollars paid out and millions of dollars that have to replaced in the capital reserves. This problem is not, of course, unique to New York. It has become a well-recognized way of raising cash as the recession has deepened. So, if people find their household budgets under pressure, they can report their vehicle stolen or become the victim in a phantom hit-and-run.

Ah, but you are saying all this needs support from attorneys and physicians prepared to push claims knowing or suspecting their clients are faking or exaggerating. Well, let’s keep this real. The FBI and local law enforcement agencies regularly run undercover sting operations to catch the fraudulent. In Philadelphia, for example, a recent operation resulted in long jail terms for an attorney and thirty-four individuals falsely claiming millions based on fake medical evidence. In Santa Clara County, California, the police recently prosecuted more than twenty body shops for supplying false estimates to insurance companies. An undercover officer driving an undamaged Honda Civic explained he had reported the vehicle vandalized to pay for a new paint job. The body shops supplied an estimate under $3,000 – insurance companies do not inspect damage for “small” claims.

The truth is there’s an epidemic of fraud and it’s not only established criminals or those on the fringe of legality like street racers. But, sadly, it’s also becoming a mom-and-pop crime. Why? Because the cost of investigating every claim as possible fraud is too expensive for the insurers. It’s cheaper to pay out all the smaller claims and absorb the losses. This is one of the main reasons why it’s getting harder to find cheap auto insurance. The volume of fraud is driving up the premium rates for everyone. But there’s a secondary problem. Outside California, insurance companies still use zip codes in setting rates. Where the levels of fraud are high in some areas, the rates reflect this. So, those who live in the Bronx and Brooklyn pay more than other parts of New York because there are more fake claims. This does not mean it’s impossible to find cheap car insurance. You just have to work harder, using a site like this, to identify those insurance companies offering good discounts. As another self-help step, you could report all those you know are making false claims. If the police and FBI cannot stem the flood of fraud, it’s up to every law-abiding citizen to step up to the plate. The result will be lower premiums for all.

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If you have prepared to use the services of the Intelius, you may also get the theft protections. You will be able to protect your self anymore. And there will no scam companies who try to manipulate you that they are on behalf of the named companies. You have to be the smart people who can overcome all the manipulations because you have experienced with the last companies which manipulated you. Intelius may give you the theft protection and offer you the background checks. Just save your money!