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Debt Settlement USA Sued by Bankruptcy Trustee for a Lot of Money

Here is an interesting legal case that was filed on March 26,2010 against Debt Settlement USA.

Former Debt Settlement USA clients, the Leber’s went bankrupt. The Chapter 7 trustee took a look at their situation and sued Debt Settlement USA claiming that Debt Settlement USA breached its contractual obligations to the Lebers’ and failed to provide the promised result.

Among other things, Debt Settlement USA failed to contact and resolve the claims of 13 enrolled creditor accounts. At most the complaint alleges, Debt Settlement USA only resolved one Bank of America Account.

The fee charged the Lebers’ for this debt settlement service was $31,747 which represented 14% of the $226,765 that the Lebers’ enrolled in the program.

The bankruptcy trustee is going after Debt Settlement USA for a judgment of $136,059 plus another $7,341 that had been taken from the clients checking account.

The trustee is also claiming that money paid within four years before the bankruptcy to the debt settlement company should be reclaimed and the payments actually wound up defrauding the creditors in this case since the money was taken by Debt Settlement USA without offering a reasonably equivalent value of services in return.

Breach of Debt Relief Agency Duties

In another claim made in the suit, one that could have a far reaching hand into most failed debt settlement services the trustee claims that Debt Settlement USA misrepresented their role as a debt relief agency under 11 U.S.C. Section 101 and 526.

In truth, DSUSA had no intention of following through because DSUSA knew the debtors were financially incapable of meeting the fee payment and settlement funds set aside provisions of the Debt Settlement Program. – Source

Debt Settlement USA Sued by Bankruptcy Trustee for a Lot of Money
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What you may notice in the email sent by Debt Settlement USA above is that it contains some of the very similar phrases and promises that many debt settlement companies current use.

  • “skillfully negotiated”
  • “team of professional negotiators”
  • “we estimate we can reduce your debt by 60% of the total amount.”
  • “will set you up on an affordable monthly payment plan”
  • “we will immediately contact each of your creditors”
  • “will go to work to reach an acceptable settlement offer with each creditor”
  • “Our main goal is to get you out of debt.”

Debt Settlement USA Sued by Bankruptcy Trustee for a Lot of Money
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About Steve Rhode

Steve Rhode
Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
  • CHOL INC.

    how do i file suit against them. they took my money and didn’t settle any of my accounts. i got a letter saying they are closing business.

    • Cabramr

      You are lucky that you even got a letter telling you that they are closing business.  I did not.  I wish I had got a letter.  Would love to see what the letter said.

  • Jake200000011

    I used to work for this company until I found out what they were really doing. Taking client’s money and providing little or nothing in the way of services.

  • Jake200000011

    I used to work for this company until I found out what they were really doing. Taking client’s money and providing little or nothing in the way of services.

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