Archive for September, 2009
Illinois Attorney General Cracks Down on Debt Settlement Industry
Attorney General Lisa Madigan today took further action to reform an abusive debt settlement industry that wreaks havoc on financially strapped consumers who are increasingly desperate to manage their rising debts in these difficult economic times. Madigan proposed legislation to prohibit debt settlement firms from engaging in unfair practices that harm consumers including charging upfront fees for services. She also filed a lawsuit against a Dallas-based debt settlement company for employing deceptive marketing practices and charging excessive fees without effectively improving consumers’ financial standing. Today’s actions continue Madigan’s ongoing efforts to protect consumers and reign in the practices of debt settlement companies. “With credit card debt at an all-time high, increasing numbers of families have become prime targets for debt settlement companies who lure consumers in with elaborate, deceptive promises to dramatically reduce consumers’ debt,” Madigan said. “Based on my office’s lawsuits and investigations of this industry, we’ve learned that consumers seldom, if ever, see their debts settled and often end up owing more than the credit card debt they originally incurred. “It’s time to put an end to these abusive, deceptive practices and enact comprehensive reforms that require these companies to earn the fees they charge,” Madigan said. Attorney General Madigan’s legislative proposal seeks to ban all debt settlement companies from operating in Illinois, unless they meet the following requirements: provide true, individualized credit counseling ; charge no up-front fees; obtain a license and a bond; disclose to consumers the risks involved in entering into a debt settlement contract; and provide a written contract and a right to cancel the contract. Madigan said her office has seen a sharp rise in debt- and credit-related consumer complaints. Over the last few years, the Attorney General’s office has received more than 12,000 complaints regarding debt and credit issues. Last year, at the height of the economic downturn, consumer debt-related issues surged to the top category of complaints filed with the Attorney General’s Consumer Fraud Bureau, including credit card debt, abusive collections and deceptive debt settlement practices. Consumers with debt settlement complaints typically report that, after they enroll in debt settlement programs, the firms charge excessive upfront fees and advise consumers to stop paying their credit card bills. All too often, consumers report that after they make many upfront monthly settlement payments, the debt settlers fail to negotiate with consumers’ credit card companies. As a result, the credit card companies add interest, fees and penalties to consumers’ credit card balances and begin collection efforts to recoup the debt, which in turn negatively impacts consumers’ credit reports. In many instances, credit card companies have sued consumers enrolled in debt settlement agreements in an attempt to collect the balance of the consumers’ accounts. In addition to her legislative proposal, Madigan continued her aggressive enforcement efforts against debt settlement companies, today filing a lawsuit against Credit Solutions of America (CSA) and its CEO Douglas Van Arsdale in Christian County. The Attorney General’s complaint alleges that the company falsely claims that its services can help to reduce consumers’ credit card debt by 50 percent. But, according to Madigan’s lawsuit, the company continually fails to negotiate with consumers’ creditors even though consumers cease to pay their creditors directly and, instead, make months of upfront payments to CSA. As a result of CSA’s failure to take any effective debt settlement action on behalf of consumers, according to Madigan’s lawsuit, creditors frequently sue consumers to collect on the outstanding balances. Madigan’s lawsuit charges defendants with violating the Illinois Consumer Fraud and Deceptive Business Practices Act by misrepresenting the services that the company can provide to consumers and the effect the services will have on consumers’ credit. The Attorney General is seeking a permanent injunction barring the defendants from engaging in debt settlement in Illinois and asking the court to order the defendants to pay restitution for aggrieved consumers, civil penalties of $50,000 for violating the Consumer Fraud Act, and an additional $50,000 for each violation committed with the intent to defraud. This is the third lawsuit that Madigan has filed this year against debt settlement firms, following complaints against SDS West Corporation and Debt Relief USA. Earlier this month, Madigan received national recognition for her extensive work to crack down on the debt settlement industry. On Sept. 16, the National Foundation for Credit Counseling honored Madigan with its “Making the Difference Award” for aggressively enforcing consumer protection laws, raising consumer awareness and financial literacy, and pursuing enforcement actions against debt settlement companies over the last decade. Madigan was one of the first Attorneys General in the country to target sham nonprofit debt management firms that competed with legitimate credit counseling agencies. Madigan filed two lawsuits against Ameridebt and Cambridge Credit, based on allegations that, among other things, the entities charged more than the statutory maximum allowed fees for its debt counseling services, failed to make timely payments to consumers’ creditors, and claimed to be nonprofit entities, yet outsourced virtually every function to related for-profit entities. The Attorney General subsequently secured settlements in both cases that signaled to sham operations that only legitimate credit counseling would be permitted in the state, which contributed to putting fraudulent debt management companies out of business in Illinois. Along with enforcement and legislative efforts, Madigan’s office conducts outreach to educate consumers on how to avoid deceptive debt settlement companies and find legitimate financial assistance. Madigan encourages consumers in financial trouble to consider credit counseling instead of debt settlement services. The Attorney General advises consumers to look for credit counseling services that charge modest fees and provide true financial and budget counseling based on a consumer’s personal circumstances. Steve @GetOutOfDebtGuy Source: Illinois Attorney General Cracks Down on Debt Settlement Industry
I Was the Victim of a Fraudulent Loan Scam and Can’t Pay My Bills. – Catherine
“Dear Steve, I was recently the victim of a fraudulent loan scam losing over $5,000. Federal/State authorities are looking into the company. As a result of this, many of my bill payments have fallen behind and my credit score is poor. Should I try to get a personal loan with a co-signer with good credit or work with a debt consolidation company of this. What do you suggest? Catherine” Dear Catherine, I think it would be a gross mistake to suck someone else into this mess by asking them to be a co-signer. If you were unable to make the loan payments or fell behind the co-signer will have the full loan land in their lap. While they offered to help you because they cared about you, you should care for them and not allow them to potentially sacrifice their credit in your situation. The loan scam was probably the catalyst that is going to drag you into bankruptcy to end these debts that you can’t pay. However, if the problem is that you are simply behind but can afford the regular monthly payments then contact a debt management company and learn more about the debt management plan they offer to help you get back on track with your creditors. Please update me on your progress by posting updates here in the comments section of your question . I’m very interested in how this works out for you. Big hug. Steve @GetOutOfDebtGuy P.S. Be sure to read ‘ The Secret of Surviving Through Difficult Economic Times. What I Learned On My Journey ‘. If you have a credit or debt question you’d like to ask just use the online form . I’m happy to help you totally for free. Source: I Was the Victim of a Fraudulent Loan Scam and Can’t Pay My Bills. – Catherine
California Arrests Dude Operating “No FICO” Credit Card & Credit Repair Scam While Out on Bail
California Attorney General Edmund G. Brown Jr. recently announced that agents from his office and the Santa Ana Police Department have arrested a “serial con artist” who defrauded hundreds of people by charging them $500 to apply for credit cards that did not exist. Ralph Adam Rendon, 33, of Orange County, was arrested late last week on suspicion of grand theft and forgery. While no new charges have been filed at this point, his bail has been increased to $1 million and a search warrant was executed at his Santa Ana business. He is currently being held in custody at the Santa Ana Jail. “This serial con artist was arrested and charged last year for selling bogus travel packages to senior citizens who wanted to go to Cuba,” Brown said. “He is behind bars again for charging his victims hundreds of dollars in application fees for credit cards that did not exist.” On April 8, 2008, Brown’s office filed 78 criminal counts of grand theft, embezzlement, and mishandling consumer funds against Rendon in Orange County Superior Court for stealing more than $160,000 from consumers who paid him for trips to Cuba that he never booked. He was arrested a few days later and posted bail. Trial in that case is set to begin on October 26, 2009. Nearly a year after posting bail, Rendon started a Santa Ana based company called London Exchange, which offered “No FICO” credit cards with credit lines of $50,000 to $100,000. A “No FICO” credit card does not require a credit check. Rendon’s company also claimed to offer credit repair counseling. To receive the credit cards, consumers were required to pay an upfront processing fee of $500. However, no consumers who investigators have interviewed reported receiving a credit card, despite paying the fee. Rendon collected more than $300,000 from over 600 individuals who responded to his company’s online advertisements from May to August 2009. The scheme eventually unraveled after the credit card processing company that Rendon used to process his customers’ payments discovered that he was a defendant in a pending criminal case. The credit card processing company notified Brown’s office, which launched an investigation. After interviewing several consumers, investigators from Brown’s office obtained a warrant to search the company’s Santa Ana office in September 2009. Investigators found hundreds of credit card applications and checks made out to the London Exchange. No evidence was found indicating that any credit cards were ever issued or that the company employed professionals who could offer credit repair counseling. The company also failed to register with Brown’s office as a credit repair agency as required by California law. Consumers who may have applied for one of these credit cards should check their credit reports for any suspicious activity. Although investigators have seized credit card applications as well as computers records containing personal identifying data, this information could have been misused. If you believe you have been defrauded by the London Exchange, file a complaint with the Attorney General’s Office at (916) 322-3360. Steve @GetOutOfDebtGuy Source: California Arrests Dude Operating “No FICO” Credit Card & Credit Repair Scam While Out on Bail
California Sues Credit Repair Business for Operating Illegally
California Attorney General Edmund G. Brown Jr. today sued Todd Swick and Michael Sardo, owners of Los Angeles based Executive Financial Credit Services, for ignoring “repeated warnings” to register with his office and post a $100,000 bond with the Secretary of State. “Swick and Sardo violated California law by refusing to register their credit repair business with the Attorney General’s office and post a $100,000 bond, even after repeated warnings,” Brown said. “So today, attorneys from my office are filing suit, sending a clear signal to credit repair firms operating in California that they must register with the Attorney General’s office and follow the law.” Executive Financial Credit Services offers to help repair their customers’ credit by challenging negative or inaccurate items on credit reports directly with the three credit report bureaus-Experian, TransUnion, and Equifax. Under California’s 1984 Credit Services Act, companies providing credit repair services in California are required to register with the Attorney General’s office and post a $100,000 surety bond with the Secretary of State. In late 2008, Brown’s office sent a letter directing the business to register and provided information to assist in the process. The business did not respond. Despite repeated warnings, Executive Financial Credit Services did not register and obtain a bond. Later Swick claimed the business was no longer conducting credit repair services and didn’t need to register. Brown’s office, however, discovered the business was continuing to operate as a credit repair firm. In early 2009, Sardo informed Brown’s office that the business was moving from California to Arizona and would not complete the registration process. Brown’s office informed Sardo that if the business continued offering credit repair services in California, it was bound by California law to register. Nevertheless, Executive Financial Credit Services still has not registered. So today, Brown filed suit in San Diego Superior Court, contending that the business violated: California Civil Code section 1789.18 for not posting a $100,000 surety bond with the Secretary of State’s office; California Civil Code section 1789.25 for conducting a business without first obtaining a certificate of registration from the Attorney General’s Office; and California Civil Code section 1789.13(a) for charging consumers money before completely performing the services they promised. The suit seeks a permanent injunction to keep Executive Financial Credit Services and its principals from operating illegally, civil penalties of not less than $200,000 and restitution for victims. Brown has taken recent action against credit fraud. Last week, Brown arrested a con artist who stole more than $300,000 from over 600 victims through a credit card and credit repair scam. Ralph Adam Rendon offered victims credit lines of up to $100,000 without any credit checks and offered credit repair counseling. Victims paid an upfront fee of $500 but never received the credit card or any credit repair services. Steve @GetOutOfDebtGuy Source: California Sues Credit Repair Business for Operating Illegally
We Are One Disaster Away From Financial Ruin. – Matt
“Hi Steve, My wife and I have approximately $20,000 in credit card debt as well as an additional $20,000 in student loan debt. We’ve also wracked up $6,000 in dental bills recently. We are always on time with our payments but making ends meet has become a major problem and I only see it going totally over the edge with this new expense. My wife is a government employee, and our concern is the negative impact it will have on her security clearance as well as any other issues it would create. We are one disaster away from ruin, ie.a Major repair to the home or car, health care etc.. Is there a viable option to our situation with consideration to my wife’s career? If so, what would be the best way to go in order to get out of this mess? Matt” Dear Matt, I assume your feeling is that with something drastic like bankruptcy that it can impact your wife’s security clearance. People fret about this all the time but it is actually less of an issue than you would imagine. In fact, having too much debt is more of a security risk since it is a defect that can be exploited with bribery or financial inducement. Being worried about security issues is normal. But to alleviate your fears the best approach is to ask your wife to confidentially discuss the issue with the security officer and get advice. I think she will rest easier once she hears that bankruptcy alone is less of a concern than she might believe. I’m also assuming that you have no savings account or emergency fund to fall back on and tap in case of a financial surprise. You are correct to be worried about not having that safety net. But, rather than feel wholly unprotected and want to rush to create that safety net you might want to consider a more measured approach. If you can afford to pay the minimum payments plus a bit extra each month you could start to pay down your debt using the debt snowball approach. What I’d like to see you do first is to just pay all the minimum payments due and put any extra money you can stash away into your new savings account . Once you can get $2,000 saved then launch into your debt snowball debt reduction strategy. Please update me on your progress by posting updates here in the comments section of your question . I’m very interested in how this works out for you. Big hug. Steve @GetOutOfDebtGuy P.S. Be sure to read ‘ The Secret of Surviving Through Difficult Economic Times. What I Learned On My Journey ‘. If you have a credit or debt question you’d like to ask just use the online form . I’m happy to help you totally for free. Source: We Are One Disaster Away From Financial Ruin. – Matt
New York Files Criminal Charges Against Debt Collectors
Attorney General Andrew M. Cuomo today announced the filing of criminal charges against 12 employees of several Buffalo-area debt collection companies for posing as law enforcement officials and threatening to have consumers thrown in jail unless they immediately paid off the debts that they supposedly owed. All of the individuals charged today worked for one or more of the debt collection companies owned by Buffalo resident Tobias Boyland, which were shut down in June under an order obtained by Cuomo’s office. Since announcing that case during the summer, the Attorney General’s Office has compiled more than 1,000 complaints against Boyland and his companies. Today’s charges and arrests are a part of the Attorney General’s ongoing probe into unlawful debt collection practices. “The tactics allegedly used here are some of the worst of the worst in the debt collection business,” said Attorney General Cuomo. “The defendants’ alleged lies, deceit and intimidation caused many innocent people to pay money they didn’t owe just to stop the terrifying calls. My office will continue to seek out and punish companies that prey on consumers and violate clearly written laws regarding debt collection.” According to the felony complaints, the defendants stole thousands of dollars from consumers from across the country by using the threat of criminal charges and incarceration to collect debts that often did not exist, had passed the statute of limitations or had been previously discharged through bankruptcy . The collectors also regularly inflated the amount owed on an actual debt and would falsely tell consumers that they were being sued in civil court. The complaints allege that the collectors used false law enforcement identities to coerce and cajole terrified consumers into agreeing to make the payments. Frightened at the prospect of arrest and humiliation, consumers authorized withdrawals from their checking accounts, wired money, or sent money orders to the collectors. Consumers were intentionally given misleading names, addresses and telephone numbers that led them to believe the businesses were located far from the Buffalo area. The 12 individuals were charged in Town of Cheektowaga Court with multiple counts of grand larceny in the 4th degree (class E felony), which carries a maximum sentence of 4 years in prison for each count. The following individuals were charged today: Tina Almond, 30, of Marsdale Road, Cheektowaga Marcus Brown, 32, of Hoyt Street, Buffalo Andrew Brzyski, 25, of Mary Lou Lane, Depew Boris Burch, 49, of Kenmore Avenue, Buffalo Rhonda DeSousa, 44, of Thornton Avenue, Buffalo Jeremy Hapka, 22, of E. Rouen Drive, Buffalo Kenneth MacGregor, 33, of Hodge Avenue, Buffalo Danielle Miller, 33, of Highgate Avenue, Buffalo Tracey Pritchett, 39, of Humboldt Parkway, Buffalo Jammiea Simpson, 35, of Elmer Avenue, Buffalo Bennie Davis, 47, Howard Street, Buffalo Meghan Williams, 30, of Hussey Avenue, Buffalo According to the criminal charges and a civil lawsuit filed by Cuomo’s office in June, Boyland and three other individuals – Kayla Pritchett, Dellian Sharp and Dorian Wills – operated numerous collection companies in at least four locations in Western New York. The debt collection agencies operated under several names across the Buffalo area, including: Central Resource Management, Final Claims Asset Locators, Final Control Asset Locators, Interchange Payment Solutions, Next Step Services, Portfolio Asset Assurance, Silverbay Services, and Teleport. Boyland was recently indicted by an Erie County Grand Jury on weapon charges. The federal Fair Debt Collection Practices Act and the New York State debt collection and consumer protection laws prohibit the following conduct: posing as an attorney, threatening lawsuits or other legal action which cannot be taken, saying a consumer committed a crime or will be arrested, and talking with third parties except to get location information. The law further requires collection agencies to send a written notice within five days of initial communication with the consumer explaining how he or she can dispute the debt. If properly disputed, the collection agency must stop all collection attempts and send verification. The arrests and charges are part of an ongoing investigation by Attorney General Cuomo into unlawful debt collection practices. In recent months, Cuomo has shut down multiple debt collection companies and required others to reform their deceptive practices. Lawsuits against several other collection companies are pending. Cuomo urges consumers to visit www.NYDebtHelp.com to learn their rights. The site allows victims of debt collection and debt settlement companies quick access to the Attorney Generals office to file complaints, and outlines the stages of the Attorney General’s investigation. The criminal case is handled by Assistant Attorney General Paul F. McCarthy under the supervision of Deputy Bureau Chief of the Criminal Prosecutions Bureau Richard Ernst and Executive Deputy Attorney General for Criminal Justice Robin L. Baker. The investigation was handled by Investigators Michael G. McCartney, Paul R. Scherf, Jr. and Sandra Migaj under the supervision of Deputy Chief Investigator James Domres. Staff from the Attorney General’s Buffalo Regional Office is assisting in the case. The Attorney General thanked the Erie County Sheriff’s Office for their help during the execution of the court ordered search warrants and the arrests of the defendants. The charges against the defendants are merely accusations, and the defendants are presumed innocent unless and until proven guilty. Steve @GetOutOfDebtGuy Source: New York Files Criminal Charges Against Debt Collectors
My Husband and I are Separated and Filing for Bankruptcy. – Alice
“Dear Steve, My husband and I are separated and filed for bankruptcy . We live in Pennsylvania. Our wages will be garnished and a trustee will handle the money. Our mortgage , car payments and the amount of the repayment plan will be garnished from our wages The attorney has requested that it be split 50/50. My question is, would my husband be able to have the amount being garnished from his wages changed since he is not living in the home? His name is on the house, etc and we haven’t filed for divorce . It is my understanding that he is still responsible to pay since his name is on the home. Is this true and what could he possibly do to have this amount changed if he wanted to? Alice” Dear Alice, Interesting situation. All I can offer you is what I have seen in my experience. This is really a better question for your bankruptcy attorney . Divorce and bankruptcy are two different events. When you get divorced you leave your spouse and come to an agreement about who will be responsible for what. That does not change the mutual obligation of either party for joint debts from before the divorce. If your husband is jointly responsible for the house, even if he is not living in it, he is still obligated. The only way I see that an adjustment could be made would be if the Chapter 13 bankruptcy was either individually or jointly converted to a Chapter 7 bankruptcy. If he did a Chapter 7 bankruptcy, all previously joint debts would then land in your lap, regardless of any divorce agreement. You would probably then have to do a Chapter 7 bankruptcy as well. Please update me on your progress by posting updates here in the comments section of your question . I’m very interested in how this works out for you. Big hug. Steve @GetOutOfDebtGuy P.S. Be sure to read ‘ The Secret of Surviving Through Difficult Economic Times. What I Learned On My Journey ‘. If you have a credit or debt question you’d like to ask just use the online form . I’m happy to help you totally for free. Source: My Husband and I are Separated and Filing for Bankruptcy. – Alice
How Much Can My Wages Be Garnished? – Nancy
“Dear Steve, I have an old crdeit card debt that has recently sent me a notification that my wages are to be garnished. My question is if I make $900 in two week payperiod how much will they take out of my check? I have alot of other bills and I’m afraid they won’t leave me enought to pay those. How much will they take from my check? Also I just started working in July, can/will they garnish my previous checks? Nancy” Dear Nancy, It really depends on what state you live in. See this previous post on wage garnishments . Please update me on your progress by posting updates here in the comments section of your question . I’m very interested in how this works out for you. Big hug. Steve @GetOutOfDebtGuy P.S. Be sure to read ‘ The Secret of Surviving Through Difficult Economic Times. What I Learned On My Journey ‘. If you have a credit or debt question you’d like to ask just use the online form . I’m happy to help you totally for free. Source: How Much Can My Wages Be Garnished? – Nancy
Banks balk at new credit card rules – Globe and Mail
Nanaimo Daily News Banks balk at new credit card rules Globe and Mail Ottawa chose not to impose caps on the interest rates that consumers are charged on their credit card debt . The regulations say that credit card contracts … Feds set new credit card rules CBC.ca Banks to be forced to increase credit card disclosure. Canada.com Ottawa rolls out new credit card regulations Guelph Mercury all 46 news articles »
Damn, I Was About to Enter a Debt Management Plan When a Debt Settlement Letter Arrived. – Richard
“Hi Steve, Thank you again for all of the great advice you provide for so many of us in need! It is greatly appreciated. My question is regarding a single creditor. I entered into a Debt Management Plan with a legitimate organization in the industry. My single concern at this point is that one of my creditors decided to sell my debt off to a law firm for collection. My account doesn’t even exist on the bank profile. I did recieve one call a week ago from them but not again. Can this specific credit card debt still be included in the DMP or do I have to pay this collection law firm the settlement amount out of pocket? I’d rather include it in the DMP as I do not have the $ amount they are asking for in a settlement. Thanks Steve, take care. Richard” Dear Richard, Excellent question. Some credit counseling or debt management companies won’t deal with a collection company. The reason, the collection companies don’t pay a commission or fairshare contribution for collecting and passing on the money. All debt management and credit counseling programs are voluntary programs. No creditor is obligated to participate in the program. All it takes is one aggressive or nasty creditor to force someone from debt management into bankruptcy . So why be aggressive then? The first aggressive creditor knows they have a better chance of collecting more from you. You’ve already made a choice to avoid bankruptcy and go into a debt management plan so the creditor or collector knows bankruptcy wants to be avoided and they know you will probably do what you can to raise the funds to pay the collector. Call your debt management company. Tell them who now has the debt and ask them to include it in your DMP. Let me know what they say and if the collection company agrees to payments. If they don’t play nice, your hand has been forced and we’ll have to decide what to do next. Please update me on your progress by posting updates here in the comments section of your question . I’m very interested in how this works out for you. Big hug. Steve @GetOutOfDebtGuy P.S. Be sure to read ‘ The Secret of Surviving Through Difficult Economic Times. What I Learned On My Journey ‘. If you have a credit or debt question you’d like to ask just use the online form . I’m happy to help you totally for free. Source: Damn, I Was About to Enter a Debt Management Plan When a Debt Settlement Letter Arrived. – Richard