Beware Debt Relief Rip-offs

Some Companies In That Field Accused Of Defrauding Clients, But There Are Warning Signs You Can Look For

(CBS)  Scam artists are having a field day as many Americans drown in debt during the recession, authorities say.

Many people, behind on their credit card payments, are signing up with companies that promise to help relieve their debt burden by negotiating for them with their creditors. Those companies tend to advertise heavily.

But, warns CBS News correspondent Michelle Miller, if the promises seem too good to be true, they probably are.

Retiree Doreen Melton and her husband, Barry Melton, say they learned the hard way, dealing with a company called Nationwide Asset Services. The experience, they say, cost them thousands.

"It sounded so good" in the ads, Doreen recalled.

The Meltons, from Lewiston, N.Y., signed up with NAS to help pay off debt totaling $15,000. They say they paid $1,800 dollars in upfront fees and were instructed not to make anymore payments on their credit cards.

"Every month," Doreen says, "I wasn't making payments, and every month they would add a late fee and an over-the-limit fee. And this was on every card. I kept getting phone calls all day long. Ninety-nine percent of the calls were creditors."

The Meltons say they paid NAS more than $11,000 over two years, but the company only settled slightly more than half the original $15,000 debt. "It's very upsetting," Doreen observes, "because our credit is destroyed."

A lawyer for NAS told CBS News the company denies any wrongdoing. But New York Attorney General Andrew Cuomo sued NAS and another company, Credit Solutions of America, accusing them of engaging in fraudulent business practices and false advertising.

Cuomo's office asserts that Credit Solutions promised nearly 18,000 customers a 60 per cent reduction in their outstanding debt -- but only around one percent of the customers -- 1,800 people -- received that savings.

The two companies, Cuomo says, "frankly are frauds."

Credit Solutions told CBS News it disputes the complaints which, it says, occurred mostly under previous management.

Cuomo says NAS promised nearly 2,000 customers a 25-to-45 percent reduction in their debt, but only 64 customers who completed the original plan got that savings. "Not only did they do nothing, they made a bad situation worse," Cuomo says.

The Meltons say NAS refunded $3,000 to them after they complained to Cuomo's office, and all they want now is to see their credit repaired and to warn others of potential rip-offs. "No matter how good it sounds or what they tell you, they're lying. There's no possible way they can do what they say they will," Doreen laments.

Miller adds that consumers' antennae should go up when something sounds too good to be true -- it probably isn't, as Doreen pointed out.

Cuomo's office advises that, if a company demands payment up-front, before completing any services, you should be wary.

Also, suggests Miller, remember that creditors have no obligation to accept a debt settlement company's offers, so be suspicious of big promises from credit repair firms.
And enrolling in debt settlement plans may not stop creditors from bringing collection lawsuits, or prevent enrolled accounts from growing larger by the addition of late fees, interest, and penalties, as the Meltons say happened to them. What's more, credit reports will reflect derogatory information, including assessed late charges and non-payment of debts, and consequently credit scores will be adversely affected -- again -- exactly what the Meltons say they went through.

It's also a good idea to run credit fix-up companies by the Better Business Bureau, Miller says.

[MerchLeads]

As U.S. households take on even more credit card debt each month; just to pay their bills, debt settlement companies and their affiliate offices are raking it in. One would say it's a great time to be in the debt settlement Industry, but will you be an affiliate office that has 10 agents and can only close 75 deals each month or will you and your 10 people close at least a deal a day each, and close 200 plus debt settlement deals every month?

Each and every day, once mortgage offices, now loan modification professionals, are adding debt settlement to their array of services. And it's to be expected, as Reuters states, "Soaring U.S. unemployment and a shrinking economy drove delinquencies on credit card debt to an all-time high in the first quarter as a record number of cash-strapped consumers fell behind on their bills."

Full Article: http://richardpreisig.com

Start Offering Debt Settlement with Class: http://merchleads.com

[pozjetsfan]

It is important that people understand that there are many ways to get rid of their credit cards. Debt settlemnt is not a bad way to go. If you have had enough of paying interest to these predatory creditors snd don't give a damn about getting calls from them, settlemnt is for you. Credit card companies can also be accused of usuary and illegal collection practices. The fair debt collection act is something that the average amercian has no knowledge of and these companies rely on that lack of information to continue manhandling their customers, not to mention raising interest rates and lowering credit limits at their discretion. Even if you have never missed a payment, this all applies to you, the consumer. Before folks throw stones at the entire industry, perhaps it would best serve them to do their own research and pick the product and program best for them. Do not let the politically driven media make your choices for you.

[janejim76]

Banks have huge debts, but they're getting a helping hand from the federal government. If you have overwhelming debt--perhaps from bad investments, or maybe a job loss, a medical crisis or just plain overspending--you're probably on your own. Check the website http://obamadebthelp2009.blogspot.com
to see if they can help. I am glad I did read it before I talk to my CC company and it helped - Jane Jim, California

[janejim76]

Banks have huge debts, but they're getting a helping hand from the federal government. If you have overwhelming debt--perhaps from bad investments, or maybe a job loss, a medical crisis or just plain overspending--you're probably on your own. Check the website http://obamadebthelp2009.blogspot.com
to see if they can help. I am glad I did read it before I talk to my CC company and it helped - Jane Jim, California

[jhaki]

Not all debt settlement companies are evil but the 800# ones seem to be. I happen to have owned a d.s. company for seven years. I am local, work with local attorney back-up, don't hold client monies, and average 65%-70% savings for my clients. I have an open door policy with my clients, don't nickel and dime them and they keep their money under their mattresses or in their bank - I do not touch their money. I charge on average $450 per settlement, paid at the end after the documentation is completed and after they have remitted their check for the settled amount to their creditor. We are not all thieves. Oh, and if there is legal action against them, my attorney intervenes at no charge to my clients.

[walt1944]

It is NEVER a good idea to hand money over to someone who SAYS they will handle your financial affairs.

There are all sorts of crooks out there just ready to take advantage of people who are desperate, down on their luck, and have no where to turn. These debt relief companies have no conscious, no morals, and no remorse for what happens to you when they "pick you clean"! They are right down there with collection agencies who promise to work with you, but are in it only for the commission they are going to get!

Buzzards and jackals, all of them!!!!!

HAIL OBAMA!!!!

[tanker144]

Looks like someone needs to work on their math skills. 1% of 18,000 is...

.01 x 18,000 = 180. Not 1800 as written. LOL

[whitemale08]

What you will start to see in theU.S., like in other 3rd world countries, is no more 'debt industry', 'debt relief' business, personal-finance-centers and banks sending credit-cards,

instead you will see small business owners forming their own pawn shops and loaning out money to their neighbors and such.

The American lifestyle of credit, 0% APR financing, pay-day-loans, car loans and traditional 30 year mortgages are about to be over,

either you have the money or you don't, and if you don't you will look like those children with no shoes and dirt on their face with their bellies poked out on Christian-Childrens-Funds tv commercials.