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Debt Settlement Legislation Runs Out of Time

Tuesday is the final deadline for all legislation to pass at least one house of the legislature.

And the cloud hanging over the General Assembly means many bills won’t make the cut.

Imagine you find yourself under a mountain of debt. You see a commercial for a debt settlement company that says it’ll help you navigate your way out. So you sign up and start paying money for years only to find out you haven’t made much headway toward paying down the principal.

Dana Wiggins at the Virginia Poverty Law Center says she hears the same story all the time. “In some cases, people were still receiving harassment by creditors and they were being sued by creditors even though they thought that they were paying money toward the debt in actuality that creditor had not been paid at all.”

And so debt settlement industry leaders sat down with Attorney General Mark Herring to craft a series of new rules.

Delegate Debra Rodman introduced the bill. “These are the kinds of companies that call you up and say hey we’ll settle all your debt just don’t pay them for a while and then you end up with bad credit and they try to collect fees before they even get to your debt settlement.”

Unfortunately for Rodman, and for people that get caught up with these companies, the bill ran out of time. Lawmakers failed to take action before the deadline this week.

This report, provided by Virginia Public Radio, was made possible with support from the Virginia Education Association.

Michael Pope is an author and journalist who lives in Old Town Alexandria.