Preserving access to federally regulated debt relief
On March 12, 2026, ACDR submitted a letter to the leadership and members of the U.S. Senate Committee on Commerce, Science, and Transportation and House Committee on Energy and Commerce on the dangers of high-interest debt traps and the importance of preserving consumer access to federally regulated debt relief in America’s rising debt crisis.
The text of that letter is as follows:
Dear Chairman Cruz, Ranking Member Cantwell, Chairman Guthrie, and Ranking Member Pallone:
We, the Association for Consumer Debt Relief (“ACDR”), are the leading trade association representing companies that help families resolve their unmanageable, unsecured debt burdens. We write in response to the February 2026 letter you received from trade associations representing the largest issuers of high-interest credit cards and installment loans, which have pushed millions of families into unmanageable debt burdens. We appreciate your respective committees’ continued attention to the worsening affordability crisis and the historically high levels of consumer debt across the country.
In short, the February 2026 letter misrepresents numerous facts about the debt settlement industry, its impact on consumers, and the need for regulatory reform. Instead, the signatories seek to protect the high costs, fees, profits and aggressive tactics of creditors, which are at the heart of financial hardship for many consumers. We are pleased to provide critical context about the state of consumer debt in America and the work our members are doing to reduce it.
The Debt Crisis and Affordability Crisis Go Hand in Hand
Over the past several years, family budgets have been squeezed by the high prices for essentials like healthcare, groceries, and gas, and the crushing interest rates on the credit U.S. consumers rely on to afford them. Inflation may be slowing from recent highs, but that comes as little relief to consumers who barely stay afloat by relying on credit cards and installment loans.
This strain is evident across the breadth of economic data. According to the Federal Reserve Bank of New York, American consumers hold $18.8 trillion in total household debt, of which a record $1.28 trillion is credit card debt.1Add to this late fees and historically high interest rates and families have few, if any, options to free themselves from a never-ending debt cycle.
Every year, our members’ services provide a critical lifeline to hundreds of thousands of families in financial hardship who believe there is no escape from high-interest debt. Debt relief is a federally regulated solution with proven results—ACDR member companies save consumers nearly $2 billion a year by negotiating principal reductions by 32% on average after fees.2, 3 While our members are proud to have helped so many struggling American households, those numbers pale in comparison to the approximately $1.3 trillion of credit card debt weighing on so many other families.4High-cost creditors would have you believe that an increase in enrollments in debt settlement programs is due to the actions of the debt settlement industry, when in fact it is driven by the rising debt crisis in America, exacerbated by aggressive collection tactics, high costs, and exorbitant fees. Any consideration of the regulatory environment governing debt settlement should be grounded in fact, not spin. It should focus on how debt relief works, its proven results, the consumer protections federal law already ensures, the reasons so many Americans find themselves in need of debt help, and the availability and effectiveness of any alternative solutions.
The Existing Regulatory Framework is Appropriately Structured Around Consumer Protection
Debt relief providers operate under the Federal Trade Commission’s (“FTC”) 2010 amendments to the Telemarketing Sales Rule (“TSR”). The FTC’s TSR amendments are one of the most prescriptive fee and disclosure regimes across all consumer finance and align the interests of debt settlement companies with the consumers they serve. The TSR transformed debt relief and put consumers in control throughout the program.
Under the FTC framework:
Consumers only pay for results — the fee on each settlement is only earned when a debt has been successfully settled AND the consumer has agreed to the settlement AND a payment has been made on that settlement. This requirement ensures that the provider is not paid unless the consumer gets results. As a consequence, there is no incentive for debt settlement companies to enroll consumers who do not need the program.
Consumers can leave at any time — consumers retain full ownership and control over the funds they set aside in their dedicated accounts for their programs and can withdraw from the program for any reason, at any time, without penalty. Since consumers only pay for successfully settled debts, if they leave the program early, they are only charged for the debts that were settled under the program. Again, there is no incentive for debt settlement companies to enroll consumers who do not need the program.
Consumers get the full picture up front — before enrolling, consumers receive clear disclosures about timelines for settlements, potential savings, total costs, and the potential consequences of enrolling, including impact to credit.
The protections work and consumers are satisfied: of the 1.83 million consumer complaints received by the Consumer Financial Protection Bureau over a one-year period, only 988, or 0.054%, pertained to debt settlement.5 These are unprecedentedly low complaint numbers for financial services businesses.
Debt Relief Serves Consumers Already Experiencing Hardship
For many households in financial distress, the practical alternatives are limited to continuing minimum payments, facing aggressive collection activity, or filing bankruptcy.
The trade associations defending high-cost lending suggest that the debt relief industry encourages default. That characterization ignores a critical reality: consumers who enroll in debt relief programs are already delinquent, near delinquent, or financially unable to sustainably service their debts. Delinquency is not the only sign of financial hardship, and it is a lagging indicator, not a leading indicator. Almost all consumers come to debt settlement having recently suffered a hardship, such as losing a job, a divorce or a medical emergency or accident. Some have already experienced delinquency, while for others, it is an inevitability that they are proactively addressing.
Consumers who have benefited most from debt settlement enroll, on average, seven accounts.6 If they instead choose to work with each creditor individually, they find every creditor incentivized to maximize recovery on its own account—through interest accrual, fees and minimum payments—regardless of whether those demands undermine the consumer’s ability to keep up with other financial obligations. At best, they might get a payment or two deferred or a modest reduction of the debt, barely making a dent in improving their customers' debt problem. Even worse: minimum payments may not reduce principal in a meaningful way for years or even decades and the emotional toll of negotiating with each individual creditor adds additional stress to someone already in financial hardship.
Debt settlement providers address consumers and their debt holistically. Instead of focusing on just one account, they work across the consumer’s full unsecured debt portfolio—balancing competing claims to achieve overall financial stability. Debt relief does not create hardship — it creates a negotiated pathway to resolution that often allows consumers to avoid bankruptcy while obtaining settlements on multiple debts. These settlements reduce principal and enable consumers to regain their financial freedom.
Consumer Outcomes Should Guide Policy
Some critics focus narrowly on carefully selected program aspects or statistics, taken out of context, in order to obscure or mischaracterize debt relief’s demonstrated track record of helping consumers. That framing ignores how these programs work and how consumers are benefited, save money and get back on a path to financial health.
Savings are realized on a per-debt basis. Each successfully negotiated account that is resolved for less than the full balance—even after fees—reduces principal, avoids future interest accrual on that balance and improves their overall financial position. By contrast, high-interest debt often traps borrowers in a cycle of minimum payments that barely reduces the principal—a system that monetizes financial distress.
The Industry Goes Above and Beyond Federal Requirements
The ACDR supports the FTC’s stringent regulation of the debt settlement marketplace and, in fact, goes beyond TSR requirements in its membership standards. Among the additional requirements imposed upon ACDR members is the requirement to complete a personal financial assessment of each consumer prior to enrollment. This ensures that services are provided to consumers with a verifiable inability to sustain their minimum payments without severe hardship, refuting the false narrative that the industry targets healthy borrowers. The intent and desire of creditors, on the other hand, is clear— make it more difficult for consumers to get out of debt and restrict, if not eliminate, any real and lasting solutions for consumers in financial distress to manage their way out of debt. Simply put, the fox is asking to guard the henhouse.
High-cost lenders are pushing to reopen the TSR in order to impose arbitrary legal requirements that could cripple the debt relief industry, ultimately harming consumers. Additional restrictions on debt settlement would restrict, if not eliminate, one of very few effective options for struggling consumers. The answer to the debt crisis is not to create more hurdles for the companies addressing the problem, but to examine high-cost lending and the systemic problems that have led consumers further into the red in the first place.
Marketing and Consumer Awareness
We agree that advertising and disclosures must be clear, accurate and effective. In fact, this is a
requirement of the FTC’s 2010 amendments to the TSR. The TSR requires the following clear and unambiguous disclosures to consumers prior to enrolling in debt settlement programs:
A good-faith estimate of how much time it will take to achieve the offered debt reduction, and when the company will make an offer to each creditor.
The amount of money or the percentage of debt the consumer must save before the company will be able to begin negotiating a settlement.
The program will likely result in a negative impact on the consumer's credit report and credit score.
The consumer’s failure to pay creditors may result in increased collection efforts, late fees, interest accrual, and the potential for being sued.
Any money set aside by the consumer in the dedicated settlement account belongs to the consumer and can be withdrawn at any time without penalty.
These disclosures ensure that consumers understand the terms of a debt settlement program before they enter it. Our member companies spend significant time walking prospective enrollees through the debt settlement process before they enter a program. By contrast, consumers are often rushed into high- interest credit cards or installment loans without clear explanation or any understanding of how that credit will impact their overall credit health.
Balanced Path Forward
Everyone’s financial challenges are different, and there is no one-size-fits-all solution to helping consumers in financial hardship. Debt relief is not a substitute for responsible lending or broader economic reform, nor is it the right solution for everyone struggling with unsecured debt—neither is bankruptcy or debt consolidation. Debt relief, however, is an important off-ramp for consumers in financial hardship, overwhelmed by unsecured debt who are seeking a lawful, regulated path toward financial recovery.
We welcome continued dialogue with the Committee and stand ready to provide additional information as needed.
Sincerely,
Jason Mulvihill
President & CEO
Association for Consumer Debt Relief
Sources:
2. John Dunham & Associates. Economic Impact of the Debt Resolution Industry (2023), Table 3
5. Consumer Financial Protection Bureau. Consumer Complaint Database. Retrieved March 12, 2026