Finance Globe
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FTC: "Debt Relief" Agency Halted, Files Bankruptcy
An operation that allegedly claimed it could help struggling borrowers eliminate debt and clean up their credit histories has been halted by the Federal Trade Commission, the agency reported on Tuesday.
The FTC has been working hard at putting a stop to crooks who take advantage of consumers in financial distress - “companies” that lure consumers into paying up-front fees in the thousands of dollars, only to actually do little to help the borrower and in many cases actually push them into deeper debt.
According to the FTC’s complaint, Debt Relief USA, Inc. and its principals falsely claimed that they could help borrowers eliminate approximately half of their credit card debt and be completely out of debt in one to two years. The FTC says that few consumers got the results they were promised.
A $19.7 million judgement is proposed by the FTC, but will be suspended because of the defendants inability to pay - the full amount would be due if the FTC finds that they were not given complete financial information about the company and its principals.
Debt Relief USA has declared bankruptcy. Through settlement of a separate case by the Texas Attorney General, consumers have already been refunded $3.7 million from the company’s bankruptcy estate - with more distributions to made in the near future.
The FTC warns consumers to be cautious of any “debt relief” agency who tells them to stop paying their bills, to pay someone other than their creditors, or to stop talking to their creditors. Also consumers should avoid paying for financial assistance services before they receive the help. Last year, changes to the law banned debt relief companies who sold their services over the phone from charging fees before they settle or reduce a customer’s credit card or other unsecured debt.
Note: The FTC files a complaint when the agency has a “reason to believe” that a law has been violated but the complaint and proposed settlement is not a ruling or finding that the defendants have actually violated the law or that the defendants have admitted to violating the law.
Source:
Federal Trade Commission
The FTC has been working hard at putting a stop to crooks who take advantage of consumers in financial distress - “companies” that lure consumers into paying up-front fees in the thousands of dollars, only to actually do little to help the borrower and in many cases actually push them into deeper debt.
According to the FTC’s complaint, Debt Relief USA, Inc. and its principals falsely claimed that they could help borrowers eliminate approximately half of their credit card debt and be completely out of debt in one to two years. The FTC says that few consumers got the results they were promised.
A $19.7 million judgement is proposed by the FTC, but will be suspended because of the defendants inability to pay - the full amount would be due if the FTC finds that they were not given complete financial information about the company and its principals.
Debt Relief USA has declared bankruptcy. Through settlement of a separate case by the Texas Attorney General, consumers have already been refunded $3.7 million from the company’s bankruptcy estate - with more distributions to made in the near future.
The FTC warns consumers to be cautious of any “debt relief” agency who tells them to stop paying their bills, to pay someone other than their creditors, or to stop talking to their creditors. Also consumers should avoid paying for financial assistance services before they receive the help. Last year, changes to the law banned debt relief companies who sold their services over the phone from charging fees before they settle or reduce a customer’s credit card or other unsecured debt.
Note: The FTC files a complaint when the agency has a “reason to believe” that a law has been violated but the complaint and proposed settlement is not a ruling or finding that the defendants have actually violated the law or that the defendants have admitted to violating the law.
Source:
Federal Trade Commission
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