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Credit "Solutions"--Crook Alert!!
Debt Settlers Offer Promises But Little Help NYTimes 4-20-09
Everyone with a credit card debt problem should read the article by David Strietfeld linked below before signing up with Credit "Solutions" or other debt settlement companies. Streitfeld tells the sad story of Tyna Carter who had $25,000 in credit card debt and wound up in the hands of a "sweet talking" credit specialist from Credit Solutions in Texas which accomplished nothing for Ms. Carter but scammed her out of $4,000.
Approximately 2,000 debt settlement companies are operating in the United States, triple the number of a few years ago and state attorneys general are being flooded with complaints about them. The situation has been exacerbated by recent big interest rate increases by the major credit card companies--CitiGroup, Wells Fargo, and Bank of America.
According to Strietfeld the premise of debt settlement is as follows: the debtor stops paying even the minimum on his credit card balance. Instead he accumumlates money in an account that the settlement company promises to use to strike a bargain with the creditors. Confronted with the certainty of some money now versus the possibility of no money later, the creditor settles for 40 cents on the dollar.
In practice, what usually happens is that once the creditor stops making payments step up collection efforts. In the meantime interest and penalties pile up in the customer's account, and his credit rating plummets.
LONG BEFORE MAKING ANY ATTEMPT AT A DEAL WITH CREDITORS, THE SETTLEMENT COMPANIES TAKE A FEE. CREDIT SOLUTIONS DEDUCTED $233 FROM THE CARTERS' CHECKING ACCOUNT FOR THREE MONTHS, AND THEN $116 A MONTH FOR THE NEXT 27 MONTHS--A TOTAL OF AB OUT $3,825 BY EARLY THIS YEAR.
[It's prudent to be wary of giving automatic access to your bank account to ANYONE. These decuctions are easy to start but can be hard to stop when the promised services don't materialize. Once a scammer gets your money you'll never see it again! Bankruptcy for many people is the best option.]
"AFTER THEY GOT THE MONEY, THEY RAN," SAID MRS. CARTER, 51.
Credit Solutions Accused of Fraud by NY Attorney General
- CROOK ALERT!! Credit Solutions of America and Nationwide Asset Services Accused of Fraud
5-20-09 New York state attorney general, Andrew Cuomo sued two big debt settlement companies accusing them of fraudulent and deceptive business practices and false advertising. The firms charged customers...
5-8-09 NYTimes Cuomo Investigates Debt Settlement Firms
- David Strietfeld: "An Inquiry Into Firms That Offer To Cut Debt"
Calling debt settlement “a rogue industry” that gives strapped consumers false hopes while socking them with high fees, New York State’s attorney general, Andrew M. Cuomo, has announced an investigation involving numerous companies in the field.
Debt Settler Scams, 4-19-09 David Streitfeld in the NYTimes
- Debt Settler Scams
David Streitfeld reports in the NY Times on debt settlemet companies that take debtors' money and do little or nothing to solve their credit problems.