Nevada, as evidenced by the number of people filing bankruptcy annually, has historically been a state in need of debt consolidation assistance and consumer credit counseling services. With the need for these debt management programs growing, so too has the need for education about what the potential benefits and disadvantages of using services. PayingPaul.Com’s mission is to not only teach people in debt how to climb out, but also to give consumers insight on how to decipher good companies from bad ones.

First, let’s start by explaining the differences between the two types of debt consolidation currently being offered: credit counseling and debt settlement. Although both offer one consolidated monthly payment, there is very little else that the two share in common.

Debt counselors have been in existence since the 1950s and are usually not for profit organizations. If you choose to enroll in a debt management plan, credit counseling companies will act directly on your behalf with credit card companies to obtain lower interest and waived late fees Although they are non-profit, they do still charge fees and it is no guarantee that you will be able to afford their services. There are also potential negative implications for your credit report with debt counseling.

Debt settlement firms take a much different approach to resolving your debt. By negotiating with your creditors a settlement company may be able to reduce your debt by 50%. Although the savings can be significant, there are some compromises and risks associated with choosing debt settlement. During the course of the program, the consumer falls behind on their payments to their creditors and instead saves money into a savings account each month. Once enough funds have built up there, the settlement company will negotiate with your creditor to get them to accept a lump some of money, usually amounting to between forty and sixty percent of what you owe, to completely satisfy your debt. While this happens, your creditors will report the debt as past due to the credit bureaus, call you about the debt, and in some cases, pursue legal action to collect the full balance.

Do you want to speak with someone about debt help? Submit a form now and let PayingPaul.Com match you with an advisor!

Nevada Debt Management Laws

Nevada has a set of laws in place to protect consumers in the state from bogus debt management companies.

Definition

Under the law, debt consolidation or “debt adjusting,” is defined as “the making of a contract or the performance thereunder, under whatever name, whereby a person, firm, company or corporation undertakes, for a consideration, the scheduled receipt of a debtor’s moneys or evidences thereof for the purpose of distribution among certain specified creditors in payment or partial payment of the debtor’s obligations.”

Fees

Under this law, debt management companies are bound by the following fee limits, among others:

(a) An initial set up or retainer fee of $50
(b) A total fee not to exceed 15% of the total debt listed on the contract with the debt management agency
(c) No fee other than the initial retainer fee may be charged until the licensee has secured the consent of creditors:
(1) Constituting more than 50 percent of the total number of creditors enumerated in the contract; and
(2) Holding more than 50 percent of the total amount of indebtedness listed in the contract. (In other words, if the debt consolidator gets the consent of all the creditors who you owe very little to, but not one account which accounts for 90% of your debt, then they cannot charge you a service or monthly maintenance fee. The opposite is also true: if the debt company gets the consent of one creditor who you owe 90% of your debt to but not two others who make up 10% of your debt, then a service fee cannot be charged. Note: Please check with an attorney for a comprehensive legal advice regarding this).

*Note: the law states that the “the acceptance by a creditor of three consecutive payments made by the licensee in accordance with the terms of the contract constitutes the consent of that creditor, if notice is included with each such payment that acceptance of three consecutive payments constitutes consent for the purposes of this subsection.”

One of the final prohibitions under these regulations is that all contracts between a debtor and an agency must “indicate the beginning and expiration dates of the contract, which, in no case, may encompass a period longer than 36 months.”

It should be noted that the following entities are exempt from these provisions:

1. Attorneys at law.
2. Banks, fiduciaries or financing and lending institutions.
3. Title insurance companies.
4. Employees of licensees under this chapter.
5. Judicial officers or others acting under court orders.
6. Nonprofit religious, fraternal or cooperative organizations offering debt adjustment service for their members exclusively.
7. Nonprofit corporations organized to render financial planning service to the public.

Licensed Debt Consolidation Companies

Cambridge Credit Counseling

Care One Credit Counseling Services

Consumer Credit Counseling Services of San Francisco

Consumers Alliance Processing Corp

Credit Counsellors of Las Vegas

Credit Counsellors of Reno

Family Financial Education Foundation FFEF

Fortress Credit Services

Global Credit Results

Money Management Credit Counseling International

Novadebt

Springboard Non Profit Credit Counseling

Take Charge America

Other Resources

Filing Bankruptcy in Nevada

Bankruptcy Laws in Nevada

Debt Collection in Nevada