Bill Introduced in Ohio to Legalize Debt Settlement

A bill has been re-introduced in the Ohio legislature that would allow debt settlement companies to operate in the state, but the prospects for passage this time around might be different following a state Supreme Court ruling that was issued earlier in the year.

The bill — the Financial Accountability and Independence Recovery (FAIR) Act — was introduced by state Sen. Bob Hackett, a Republican. It has already earned the endorsement of the American Fair Credit Council, a trade group of debt settlement organizations. The bill is also being promoted by Betty Montgomery, a former Attorney General of Ohio. “First of all, the most important thing is it gives consumers an option,” she said, according to a published report. “Secondly, it also sort of levels the playing field between credit counselors and debt settlers.”

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Sen. Hackett introduced similar legislation during the most recent session, but the bill only made it out of Committee before the session ended. Sen. Hackett thinks the bill has a greater chance of becoming law when the state legislature reconvenes in September after the state Supreme Court ruled that a non-lawyer is not engaging in the unauthorized practice of law when he or she negotiates to settle a debt on someone else’s behalf. Lawyers in the state are opposing the bill, saying that the terms and obligations of debt settlement agreements are best negotiated by attorneys who understand the legal nature of the agreements and can ultimately protect consumers. But there are those who say lawyers are only looking out for their self-interest because they prefer to steer consumers toward filing for bankruptcy protection instead.

“Truthfully, the bar has a lot of attorneys who make money on bankruptcy filings – everybody knows that. And we’ve been told that’s what drives their opposition to this bill,” Hackett said, according to a published report. “But Ohio should not seek to drive its citizens into bankruptcy simply because it benefits a particular business model. In the end, this bill doesn’t mandate the use of debt settlement services – it simply allows Ohioans to consider them as an option.”

The AFCC said that the bill, if enacted, would help individuals in Ohio get their financial lives back on track.

“Now more than ever, Ohioans must be afforded the tools to take control of their financial futures, and while debt settlement won’t solve every problem, it is the best opportunity to get many Ohioans back on track toward a path to financial security. If passed into law, this effort will pay off for consumers for years to come,” wrote Denise Dunckel, the Chief Executive of the AFCC.

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