Debt Settlement USA Nailed on MSNBC With Debt Settlement Victim

Debt Settlement USA was nailed today on MSNBC as an alleged scam.

Three years ago, Kopycinski was told by several advisers that he should file for bankruptcy. His finances were a wreck. He held $35,000 in credit card debt and was on the hook for a car loan that he’d co-signed for a family member. On his salary as Catholic high school teacher, it seemed there was no other way but to wave a white flag. But Kopycinski believed that bankruptcy “was a cop-out,” so he went searching for an alternative. When he heard an advertisement for Debt Settlement USA, he thought he’d found it. Instead, he had hooked his fortunes to an industry that the attorney general of Illinois, Lisa Madigan, calls “a scam.” – Source

Instead of continuing to make his payments, Kopycinski said Debt Settlement USA employees told him to set aside $650 each month to build an account that would be used for settlement offers later. But as is typical of debt settlement firms, Debt Settlement USA made sure its bill was paid first. So it collected $442 of each monthly payment toward its total $4,552 fee. After eight crushing payments, Kopycinski had only built $1,800 toward his debt, but Debt Settlement USA had been credited with $3,566.

Patricia Dose, Debt Settlement USA’s general counsel, said her firm never tells consumers not to pay their bills, adding that by the time consumers come to them they’ve already stopped paying in most cases. She said she could not comment on Kopycinski’s specific situation, citing privacy concerns, but that the firm charges up-front fees that are similar to fees charged by bankruptcy attorneys.

“It’s all disclosed in the contract,” she said. “… We’re very up front with our consumers. Everybody wants to be paid for their services.”

Kopycinski tells a different account. He says he started faithfully paying into his settlement savings account, but the phone calls never stopped. Some creditors even tried to talk sense into him.

“I remember one guy from a bank just started screaming at me, yelling, ‘This is what’s going to happen! This is what’s going to happen!” he said. “When I tried to explain what I was doing, he just yelled louder.”

Attorney General Lisa Madigan

When he told his Debt Settlement USA counselor about the exchange, he remembers the operator acting surprised.

“He said, ‘Wow, I know him. I deal with him all the time. He must really not like you for some reason,” Kopycinski said.

Then, he was sued by Chase, which was now seeking $17,000 from him. A notice of the lawsuit was left on his back porch.

Afraid, he called his counselor at Debt Settlement USA, who transferred him to the company’s legal department. There, an operator directed him to a website with free legal forms and helped him fill out a motion to dismiss the case for improper service. Kopycinski had to figure out for himself where in downtown Chicago to file the paperwork.

Dose, however, said her firm might provide some “general information” but it does not offer legal advice.

In the end, the motion was filed incorrectly and Kopycinski received notice that a default judgment had been entered against him.- Source


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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.
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