Today's down economy and credit squeeze has more and more
people looking for help in resolving their problems with debt.
The largest debt-resolution company in the country is called
Credit Solutions, but many of its customers claim it has caused them credit
problems. It promises to help the growing number of people who have problems
with their credit. But now a Texas-based company is being sued by a
Now a class action lawsuit has been filed in
"They promised after three years I'd be completely out
of debt,"
"They were going to lower my debt by about 50
percent," said
Both had gotten deeply into credit card debt. But they said
after going to Credit Solutions for help, they found themselves deeper in the
red. And they aren't alone.
More than 1,000 complaints against Credit Solutions have
been registered with the Better Business Bureau in the past three years,
leading the B.B.B. to warn consumers that there are bad actors in the
debt-resolution business.
"If they're asking you for money up front, (that's) a
huge red flag. Typically you don't pay someone $500 that can look at your debt
and help you get out of it," said Paula Fleming of the B.B.B.
Credit Solutions charges a fee of 15 percent of the debt
amount. It promises to negotiate with the lenders so the client can pay less --
up to 60 percent less.
But Darlene Bradford said she paid Credit Solutions $1,000
in fees and got no relief from her debt.
Tyler Weaver is with the
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Lawsuit accuses collector of harassment over
invalid debts
Minnesota Attorney General Lori Swanson Monday sued an
"This debt collector crossed the line by pursuing debt people said they
didn't owe and failing to verify that they did owe it," Swanson said. The
office received more than 50 complaints about AFNI Inc., a collection agency in
The lawsuit, filed in Hennepin County District Court, alleges that in
addition to not verifying debts, AFNI collectors would "badger Minnesota
citizens into paying debts that they do not owe, improperly reported
illegitimate debts to credit bureaus, and refused to take steps to remove the
debts from Minnesota citizens' credit reports," violating state and federal
collection laws.
AFNI, a member of the Edina-based collections industry trade group ACA
International, said it had not seen the lawsuit and declined to comment.
Megan Simonson of
"In addition to having one AFNI agent lie to me and attempt to defraud
me, AFNI simply would not act to address my concerns and resolve the problem
with the false debt in time for me to close on my house," she stated.
The complaint also said some debts that AFNI attempted to collect were as
much as a decade old. And proving that the debts weren't theirs fell on the
shoulders of the consumers, not the agency, according to the suit. The term
"zombie debt" has been coined for old debt that's hard to verify and
won't go away. MORE
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For more information of you rights under the Fair Debt Collections Practices Act see earlier blog:
How to deal with abusive Debt Collectors -Do you Know your Rights?
Appeals Court Rules Aggressive Debt Collector Violates Consumer Rights
For much more info on more lawsuits and your rights see: Debt Collection Issues
Also visit Attorneys John Watts & Stan Herring's informative Law Blog
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"many of its customers claim it has caused them credit problems"
Of course the debt settlement process will negatively affect a person’s credit. Isn't Credit Solutions telling their clients this? Is it in their contract?
Listen. Debt settlement is a bankruptcy avoidance strategy. It’s intended for people who have substantial credit card debt and for some reason, now can’t afford to pay their creditors on their current terms.
Debt settlement is intended for people who were falling behind on their bills anyway or were months late already heading for bankruptcy.
People that want debt help but are concerned about their credit score should not consider a debt settlement program. They should consider a legitimate credit counseling service or pay the creditors on their terms.
Now if you don’t like those options, than you will have to sacrifice your credit score. You can’t maintain a good credit score when you deviate from the creditor’s terms. It’s that simple.
If you have a mountain of debt and now have ridiculously high interest rates from missing a payment due date or something, you may want to contact your creditors and tell them you cannot afford a 28% interest rate.
Unfortunately, in most cases, most credit card companies will not budge and tell you tough luck – but sometimes they will so you have to at least try.
Also, for those people who claim that reducing interest rates on accounts or settling debt can be done by anyone, quite frankly, doesn’t know what they are talking about.
That’s misinformation is coming from either an uninformed person or bank propaganda that found its way through the Internet.
The fact is, many legitimate debt settlement companies that have everyday working relationships with creditors and that understand the negotiation processes, have a hard time. And they have experience at settling debts everyday!
Lastly, if you have some income but are heading for bankruptcy due to the extreme debt load, than consider a debt settlement service that’s facilitated by attorneys.
What do you know about Credit One Debt Solutions or Consumer & Business Debt Counseling services, Inc. 2101 W. State Road 434 Ste. #201, Longwood, Florida 327779
I don't know of that particular company off hand but I have yet to meet a debt repair company -that provided a real a solution -without costing you more money. Most companies will charge high fees. If a legit non-profit, they wouldn't ask for fees up front.
SEE: http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre19.shtm
You can and should always check with the BBB, do a search on the web for complaints and in this case, check with the FL Attorney General's office and/or website at http://www.myfloridalegal.com and brush up on a few of their actions against these types of companies.. Here's a couple of links -that can give you some insight. Know what you are getting into.
http://www.givemebackmycredit.com/blog/2008/10/forida-attorney-general-cracki.html
http://www.givemebackmycredit.com/blog/2008/10/consumers-paid-attorney-to-fix.html
Great advice Ms. Richardson. Many individuals can negotiate on their own behalf, and there are countless scams around. The best advice for anyone is just to thoroughly research -anyone- he or she is doing business with. Thanks for the great writeup!