If a debt-settlement company takes your money before doing anything for you, it's now breaking the law.

This week, a federal rule went into effect that bars companies that offer debt relief over the phone from charging up-front fees. It's part of the Federal Trade Commission's effort to crack down on unscrupulous firms that have ripped off desperate consumers with false promises of erasing their credit card balance or other unsecured debts.

As of Wednesday, these companies can only collect their fees after at least one debt has been renegotiated and the debtor has made at least one payment under the new agreement. Firms that promise to erase tax debt, however, are exempt from the rule, at least temporarily. Find out more by clicking here.

The Better Business Bureau of Minnesota and North Dakota breaks it down into simpler language: