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Ohio lawmakers expected to vote on debt relief bill

When individuals face overwhelming debt, Chapter 7 bankruptcy protection provides a way out. Yet, sometimes those struggling with debt wwant to try other options first. Current debt settlement laws in Ohio prevent for-profit debt settlement firms from operating in the state by limiting the fees companies can charge for debt relief services. As a result, those facing overwhelming debt typically opt for bankruptcy or credit counseling from a non-profit organization.

The people of Ohio may have more options in the near future, however, as the legislature is looking at a law that will open the door to consumer debt settlement firms. Two Cincinnati state representatives have sponsored a bill that would allow certain federal regulations to become the law in Ohio. These laws would bypass the existing state caps on fees.

The bill is backed by debt settlement firms who, up until this time, have been resistant to help Ohioans because of the caps in place. Opponents argue that predatory practices will result if the bill is passed, and people would be better off in non-profit credit counseling or simply filing for bankruptcy.

Legislators are trying to determine whether for-profit debt settlement firms provide a benefit for those with overwhelming debt problems. With fees of around 18 to 30 percent for most of these companies, opponents of the bill argue that the cost of allowing these companies into Ohio is too high. By contrast, credit counselors under the existing law have an 8.5 percent cap. The legislation is in House committee, but is expected to come up for a vote soon.

Whether or not this law passes, one thing remains the same. The issues surrounding personal debt are quite complex. Those who feel there is no way out need to understand the legal options currently available to them. For some, filling Chapter 7 bankruptcy protection is the right solution, giving them the chance to start fresh.

Source: Cincinnati.com, "Vote could come soon on debt-settlement firms," Chrissie Thompson, Nov. 13, 2013

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