I was forwarded several documents by a tipster (send in your tips here) regarding the settlement services offered by Robert S. Gitmeid & Associates at 11 Broadway, Suite 1677, New York, New York 10004.
It is a very nicely designed document.
What caught my eye was the client’s budget. But let’s start with the services the agreement says the consumer is purchasing.
“The scope of the services provided to you by RGA under this Client Retainer Agreement shall be limited to assisting you to negotiate and settle your unsecured debt with your creditors to the best of RGA’s ability and within applicable rules of professional conduct that regulate attorney practices. You understand that the scope of the services contemplated by this Client Retainer Agreement DOES NOT include legal representation in any law suit, whether such action is instituted by a creditor, collection agency, or any other party. Although the services provided by RGA aim to negotiate down your outstanding unsecured debts, RGA cannot prevent a creditor from initiating legal action against you. In the event that a creditor commences legal action against you, you agree to immediately notify RGA of such action. Furthermore, RGA will not represent you in any such lawsuit absent a separate, mutually executed retainer agreement that outlines the scope of such representation. Of course, RGA will continue to negotiate with such creditor on your behalf, as outlined in this Client Retainer Agreement.”
You will notice that one of the services not included is any sort of financial advice or fiduciary responsibility to look out for the best interest of the consumer.
The client retainer is very clear what the consumer is purchasing.
In this agreement, they are purchasing the services of an Illinois attorney, Julie Crabbe, in conjunction with Robert S. Gitmeid who is admitted to practice law in New Jersey, New York, and Florida.
Those services are not guaranteed, may use some sort of outside support staff, and include services from Global Client Solutions.
This is certainly an observation and not an accusation of a scam. While the attorneys are being hired for a specific service, part of the client agreement is a budget.
What I found missing was any sort of expense for retirement savings or emergency fund savings. In this case, the consumer is said to have only $9 a month left over for unexpected expenses and/or savings.
It is very possible that you can talk to 100 people and get 100 different opinions but I think the odds of a consumer making it through all estimated 42 months of the program without a financial surprise, is not favorable.
In case you might feel this is safe because the consumer has an adequate emergency fund saved already, the document says otherwise.
Let me show you some numbers that might put my observations into context.
While I don’t know the date of birth of this person in the client agreement since it is blacked out, let’s say they are 40-years-old.
This Program Will Potentially Cost $596,000 in Lost Retirement
FYI: The cost of lost retirement funds is the value of the money and return over the 3.5 year repayment period given the forecast rate of return.
You can use my calculator here.
I have no idea if the consumer was advised what the cost of lost retirement would be if they saved the money. I doubt they were because that was not the service being sold.
A Chapter 7 bankruptcy can discharge your debt in about 90 days and cost less than $2,000. This would let the consumer get started on retirement savings ASAP. That would result in a nearly $600,000 nest egg when retirement rolls around.
Ironically, the client retainer agreement even says the firm deals with bankruptcy, “RGA is a Debt Relief Law Firm as defined by the United States Bankruptcy Code and we assist people in filing for bankruptcy relief.”
Retirement savings are the most alarming crisis I am concerned about when it comes to debt. It will strike people when they are least able to care for themselves and we have no idea if any sort of social safety net will exist in 30-years.
It is important for people to understand that when they hire most debt relief companies what they are getting is a sales pitch for the services being sold and not financial advice that may be in the interest of the consumer.
Be a smart consumer. Please.
- Plastic Pandemic: US Credit Card Debt Surges Nearly 20% in Q1 2021! - May 12, 2023
- The IRS Resumes Collections Notices: What You Need to Know Before It’s Too Late - May 12, 2023
- How Can I Deal With Payday Loan Debt? - May 12, 2023
Oh, how I wish I would have seen your article two years ago…. (although it wasn’t even written at that time)…. my husband, sadly, found himself in an excessive debt situation a couple of years ago (I had no idea), and even more sadly, hired this law firm to “negotiate” his debt settlement. Several of the debt negotiations have not really saved him any money, when you consider that the firm takes their “fees” on the original amount of the debt (as opposed to the settlement amount), and then you pay those fees on top of whatever negotiated reduced settlement amount they come up with… occasionally, those two amounts combined either equal or are even greater than the amount of the original debt… then, they have the audacity to negotiate a settlement for you, tell you the terms that THEY want you to agree to, then provide you with an Agreed Consent Entry outlining ADDITIONAL terms of settlement that they never informed you of and expect you to sign the Entry! On two occasions, my husband was told, “Hey, we have a settlement for you…. your settlement amount will be “x” and your monthly payments will be “x”… do you agree?”…. Well, sure, we can agree to that…. but then when presented with an Agreed Consent Entry to sign, we are also expected to agree to allowing the creditor to put a lien on our house…. NEVER mentioned to us as part of the settlement negotiations and when we questioned it and refused to agree to it, we were told every which way that “well, this is part of the process”….. No, sorry, I have worked for an attorney for almost 30 years and I know it doesn’t have to be part of the process, and I also know that a reputable attorney would NOT coerce you to signing something that you did not agree to or were never informed of… Now, we are trying to determine the exact amount of attorney fees that have been incurred, what has been paid, to date, and what is still outstanding to date. Gitmeid refuses to send us any type of invoice via email or mail, claiming they are “not allowed” to do so…. but they can give us amounts over the phone (which were incredibly inflated). I find this incredibly suspect and unscrupulous. If I can even figure out the proper authority to file a grievance against this scam of a company, I won’t hesitate to do it, and believe me, I’m looking! People should stay as far away from this company as possible! File bankruptcy, negotiate with creditors on your own, or seek help from a REPUTABLE, unscrupulous company!
It sounds like these accounts went all the way to a lawsuit. Did the company attempt to negotiate them before you were sued?