Report Findings Validate Economic Benefits of Debt Settlement Programs for Consumers

An Updated Economic Analysis of the Debt Settlement Industry –
Second Edition – September 2015

FORT LAUDERDALE, Fla.–(BUSINESS WIRE)–The results of a nine year study of consumers enrolled in debt
settlement programs, commissioned by the American
Fair Credit Council
(AFCC) and performed by the Certified Public
Accounting firm of Hemming
Morse LPP
, show consumers realize financial benefit and have a
higher probability of success since regulatory reforms went into effect
in 2010. The August 2015 study, the second of its kind and a follow up
to the original study commissioned by the AFCC in 2012, addressed the
outcomes of over 1.9 million consumer accounts enrolled in debt
settlement programs by approximately 297,000 consumers from January 1,
2006 through March 31, 2015.

This study, the most comprehensive of its kind to look at the outcomes
of debt settlement programs, revealed a number of positive findings for
consumers seeking relief from the burden of credit card debt. Most
notable among the findings are that consumers are receiving financial
benefit in the form of debt reduction resulting from regulations imposed
on the debt settlement industry through the Revised
Telemarketing Sales Rule
in October of 2010 by the Federal
Trade Commission
and The
Consumer Financial Protection Bureau
. Several highlights from the
report include the fact that:

  • The average settlement of an account enrolled in a debt settlement
    program is 48% of the balance owed at the time of the settlement.
  • Over 50% of consumers settle accounts within the first 4 months of the
    program (vs. 12% prior to regulatory reform).
  • Over 90% of consumers had settled at least one account in the first 8
    months of the program (vs. 65% prior to regulatory reform).
  • 45% of consumers had settled 5 or more accounts after 30 months in a
    debt settlement program.
  • 82% of consumers had settled 3 or more accounts after 30 months in a
    debt settlement program.
  • Debt reduction consistently ranged between $2.75 and $3.13 per $1.00
    of fees paid for all client types (active, completed or terminated)
    over the life of a debt settlement program.
  • Over 95% of consumers enrolled in a debt settlement program after the
    implementation of regulatory reforms realized savings through these
  • Consumers studied as a part of this report recognized $2.1 billion in
    debt reduction for a net savings after fees of approximately $1.4
    billion or approximately $4,600 per consumer.

Robby Birnbaum, President of the AFCC commented, “We are pleased that
this report validates what our association and its members have known
for years; that debt settlement programs provide a valuable and much
needed option for consumers struggling with high amounts of debt and who
cannot otherwise qualify for other options such as credit counseling or
traditional financing such as debt consolidations loans or mortgage
refinancing. Overall, the introduction of regulatory reforms for the
industry has been positive and resulted in a higher likelihood of
success for consumers. AFCC is proud of the work our member companies
have done on behalf of consumers, delivering billions of dollars in debt
reduction for struggling consumers.” For more information or to obtain a
copy of the report, visit the American Fair Credit Council’s Website at

About The American Fair Credit Council
The American
Fair Credit Council
(AFCC) is the leading association of
professional Consumer Credit Advocates. The AFCC, and its member
companies, work to represent the rights of consumers struggling with the
overwhelming burden of debt. The AFCC has developed a strict Code of
Conduct centered on best practices designed to protect the rights of
consumers and require member companies to follow strict regulatory
guidelines for operation. All AFCC members operate on a “No Advanced Fee
Model” and never charge a fee for services until a consumer’s debt has
been successfully negotiated.

About Hemming Morse LLP
Founded in 1958, Hemming
Morse, LLP
is a national firm leading the accounting industry in
Forensic and Financial Consulting Services, as well as Financial and
Compliance Auditing of Employee Benefit Plans. Based in California, with
more than 100 employees working from offices in San Francisco, San
Mateo, Los Angeles, Walnut Creek, Santa Rosa, Fresno and Chico, Hemming
Morse handles complex and high-profile assignments that are local,
regional, national and international in scope.


The American Fair Credit Council
Robby Birnbaum, President,
Morse LLP
Greg J. Regan, CPA/CFF, Partner, 415-836-4034