Listen to the Lies This Marketing Company Tells Consumers to Sell Attorney Based Debt Settlement Services

I’ve previously written about the attorney model debt settlement firm approach that some debt settlement companies are rushing towards in an effort to circumvent any fee ban that may be put in place. The logic is that attorneys are exempt from most laws so if an attorney is doing debt settlement then it must be okay to do. The reality of the new FTC rules is that attorneys are not easily exempted from the regulation and that the statements you will hear the sales representatives make would fall under the new FTC rules and be actionable since they would be determined to be both abusive and deceptive.

As debt settlement companies rush to adopt an attorney model, where an attorney is the face of the debt settlement company or the excuse that allows them to operate in order to step around rules and regulations that debt settlement companies feel will hamper their ability to sell, consumers are being duped and harmed.

There are three major issues for me.

  1. We have the issue of representation and trust. When a consumer calls a telephone number, visits a web site, or sends an email and is told they are talking to a law firm, should the consumer rely upon that information as being true? If it is not true, does that then become deceptive marketing and a misrepresentation of the facts? My vote is, you bet it does.

    And if a non-attorney marketing wing or company is misrepresenting debt settlement services under the name of an attorney, is the attorney legally responsible for that misrepresentation? The state bar association feel the attorney has some personal responsibility for tat misrepresentation.

    From a consumer protection point of view, the non-attorney firm that presents themselves as a law firm or an attorney appears to deceptively confuse consumers as to who they are dealing with and the level of services and representation they will receive. Not only that, but they provide callers with just wrong or bad information.

    In the debt settlement world right now it is becoming increasingly confusing for consumers to know exactly who they are dealing with when they call for help and the people that answer the phone say they are a law firm. Are they really?

    As one person told me, “If I’m talking to a debt settlement marketing company I want to know it so I can filter what they are saying to me. It’s like when you go to the car dealer and talk to a salesperson, at least you can pass what they say through a B.S. filter. It’s not like you are talking to Consumer Reports.”

  2. It has been very clear that an ownership by a non-attorney in a legal enterprise is not permitted in most, if not all states. And the splitting of fees consumers pay to a lawyer that are then divided between a lawyer and a non-lawyer is a no-no as well.
  3. It seems that the debt settlement programs instruct the consumer to stop paying their creditors, to deposit the money into a trust account, and while the consumers credit is being impacted and collections and possible legal action begin, the debt settlement program is making money off of the consumer by placing them in a worse financial position. “Don’t send money to your creditors, pay us fees instead.”

The Court Has Spoken About Problem Areas With Attorney Model Debt Settlement

Recently Judge Sawyer ruled in a bankruptcy case involving now disbarred attorney Keith “Andy” Nelms, who ran the settlement company Allegro Law, that the manner in which the attorney did business created four structural problems.

  1. Back office work was provided by non-attorney firm and the numbers made it impossible for the attorney of record to do the actual work. The first structural problem with the way Nelms did business is that Americorp was doing virtually all of the work, but it was not a law firm and it did not use lawyers to provide services pursuant to its agreement with Nelms and the Allegro companies. Nelms, on the other hand, was a lawyer, but wasn’t doing much of anything that resembled real legal work. To put the matter plainly, Nelms was “fronting” his law license for Americorp. When one considers the math here, it is easy to see the problem. If we consider 15,000 individual consumers and assume for the sake of rough analysis, 5 creditors per individual debtor, we see that Nelms would have had to negotiate 75,000 contracts. Hence, Americorp attempts to fill the gap using Nelms and his law license in name only. In fact, Nelms was deceiving his clients and Americorp was practicing law without a license. Nelms represented to his clients that he was acting as their lawyer and his written contracts with them were styled retainer agreements.
  2. Fees paid out to attorney and non-attorneys before paying creditors. The second problem arises in the payment of fees to Nelms and Americorp. Before any money was paid to creditors, Nelms paid himself and Americorp. As Nelms’ clients are not in bankruptcy and do not have the benefit of the automatic stay, there was no legal right not to pay the creditors. The Circuit Court found that Nelms had deceived his clients regarding the payment of both his fees and the payment of his clients’ debts.
  3. Illicitly diverting funds. A third problem arises in that Nelms collected millions of dollars from clients, not all of which was to be paid for his “front loaded” fees, but rather at least some of which should have been paid to creditors. The Circuit Court found that Nelms and his codefendants “illicitly diverted some of this money to themselves and their families and other businesses.”
  4. Attorney dealings with creditors. A fourth problem arises from Nelms’ dealings with the creditors of his clients. For example, Nelms sent 2,344 identical letters to Chase Bank on behalf of his clients, purporting to dispute the validity of their debts. This was not done in a good faith effort to properly adjust the amount of their debts, but rather to buy time so that Nelms could collect his fees from payments made by clients while temporarily holding creditors off with frivolous disputes as to the amounts owed. In other words, Nelms was taking money for himself which was intended by his clients to be paid to Chase and other creditors. The Circuit Court found that only 58 of 5,453 Chase accounts were settled for less than the full amount of the debt, and that of these 58, 30 were settled directly by the consumers, without any input from Nelms or Allegro. – Source

That judicial comments enlightened me that there may be bigger issues surrounding attorney debt settlement other than just the marketing of those services. It seemed that regardless of state regulations regarding if an attorney was exempt or non-exempt from regulations concerning the sales of debt settlement, there were some sticky professional issues to overcome.

Those issues are interesting on background but not the focus of this article. This article will focus on the lies consumers are told to trick and deceive them into signing on the electronic dotted line and pay thousands and thousands of dollars for worthless debt settlement services from attorney fronted firms.

So Let’s Get to It

These calls were made to three different sale representatives of the same marketing company pretending to be the same real law firm. The marketing company actually owns and runs the websites pretending to be attorneys but they are not the actual attorneys.

Let’s start with what the consumer is told when they call and are sold debt settlement services. As you listen to the calls you will hear that I repeatedly gave the sales representatives all sorts of opportunities to say who they were employed by and did not work for the law firm, yet they insist time and time again that they do.

There is no logical way that any consumer would understand that what is actually happening here is they are speaking to a non-attorney firm employee, who is paid on full commission, to sell them debt settlement services.

It is my opinion that what you will listen to amounts to a massive sales deception through misrepresentation and incorrect facts given to callers under the name of the law firm in order to sell large amounts of debt settlement services.

What Consumers Are Told When Sold Debt Settlement

I’ve made some bulleted notes of what each segment contains. These notes are not transcribed comments, just reference notes so you can see what the clips contain.

The notes marked with * really concerned me. I did find those statements to be questionable, disturbing, inaccurate, untruthful or misrepresentative.

In order to be able to present you with this information I have had to alter the recordings to attempt to mask the voices of the employees.

Remember: These Sales People Are Pretending to Be Law Firm Employees

Who Are You?


  • We are a law office. *
  • We offer attorney debt renegotiation.
  • Reduce debts down to forty cents on the dollar. *


  • We are not a settlement company. We are a law firm. *
  • We do all kinds of cases, criminal, civil, black market baby adoption.
  • Interesting to note he said they would evaluate the situation to determine the best option but they never did on the multiple calls I made. In fact they trashed the other options.


  • I work directly for the law firm and actual attorneys. *
  • Sales person insists he is a law firm employee even though I know he is not.


  • I work directly for the attorneys. It’s one company only, not two, three or four. *
  • Sales person insists it all is one company and they are with the law firm.


  • How long have you been with the law firm.
  • Been doing this for 6 1/2 years.
  • Interestingly the marketing company he works for has only been around for three years.


  • I found you on XXXXXXXX.com. We are a law firm.
  • We are the premiere debt negotiation law firm in the country. *
  • Yet another employee insisting they are a law firm.
See also  FTC Speaks Out a Bit More on Attorney Model Debt Settlement

Are You a Law Firm?


  • We are a law firm. We handle other type of cases and you can check us out with the bar association. *
  • Worked at other debt settlement programs.


  • We are an actual attorneys firm. *
  • We have a 100% guarantee of service. *
  • We are attorneys. *
  • We have a 100% success ratio. *

Do I Need to Go With an Attorney Firm for Debt Settlement?


  • Make sure you do go with an attorney firm. *
  • Other debt settlement companies that are not attorney firms get in trouble with misrepresentation. *


  • The Attorney General is really cracking down on non-attorney debt settlement companies.
  • Each call that we have is actually recorded.
  • The Attorney General, FTC, State Bar they are examining to make sure we are doing exactly what we say. *
  • Attorneys don’t want to jeopardize losing their license.

Who Will Handle My Account? Will I Be Assigned an Attorney?


  • You will be assigned an attorney.
  • We are a debt negotiation law firm.


  • The advantage to going with an attorney based company is you will have a lot of people helping and your own debt specialist.
  • Attorneys have been around X years and the creditors prefer dealing with them. *
  • You won’t be assigned a particular attorney but you will be assigned a debt specialist and someone else will negotiate your debt for you.


  • A team of attorneys negotiates directly with the creditors you owe to have your debts reduced by 60% or more. *


  • You will be assigned to one person. (Inferred to be an attorney.)
  • You will be working directly with the attorneys. *
  • Will I be assigned an attorney in my state? We do business in all states but two but we work out of one.
  • We are licensed in every state but two.

We Will Eliminate 60% of Your Debt.


  • We go in and negotiate and get at least 60% or more of that debt erased including late fees and interest. *


  • Our attorneys will negotiate your debt and reduce it by 60% or more. *


  • We can get 60% or more of your debt erased. *
  • Payment based on 40% payback.
  • We can usually settle for less than 40 cents on the dollar. We know we are going to get at least that amount. *
  • In most cases they settle for less. *

How Many People Finish the Program and Make It All The Way Through?


  • Over 87%. *

I was told by a sales representative in an email that there program was more successful than bankruptcy, consumer credit counseling, and consolidation and I’d get 100% of my debt negotiated. *

You Need to Stop Paying Your Creditors.


  • Attorneys want accounts to be 4 to 6 months delinquent.
  • If you are current the attorneys want you to stop paying and get delinquent. *

Will I Pay Interest On My Debt In The Program?

When you listen to these calls remember that the debt settlement company or law firm has no authority stopping interest and the reality is the creditors will continue to add on interest and late fees as long as the consumer is behind in their payments.


  • I will put you in a program with no interest and no prepayment penalty and no interest. *


  • Not responsible for any more interest or late fees on the accounts once enrolled. *


  • You are not responsible for any interest or late fees but if you cancel out of the program you get those charges all back. *
  • This seemed like a warning or scare message that you can’t quit.


  • You will absolutely not be paying interest in the program. *

My Debt Settlement Payment is Calculated


  • Based on about $70,000 of debt the payment would be $1053/month for three years or $802/month for four years.
  • The shorter the program the quicker the credit rebounds.


  • On $80,000 of debt your payment will be $778.33 for 60 months.

Can Debt Settlement Hurt My Credit?


  • Anything you do can impact your credit.
  • While you are in the program the credit score will drop a little bit but it rebounds faster than any other debt management program out there and it has the least impact. You’ll see it drop a few points. *
  • Score will be the same or better than when you started. *


  • 100% of our clients don’t make payments to creditors once they start the program.
  • Credit report will reflect negotiated $0 and you can have that removed. *
  • In six to eight months you should be back in good credit status. *
  • Program will help me to increase credit score more. *
  • You’ll get more offers for credit while you are in the program because it looks like you can afford more with reduced debt levels. *
  • The idea that I’d get more offers for credit after trashing my credit in the debt settlement program is non-sensical.


  • Once you stop payments to let the accounts go delinquent it will show up as some late pays.
  • Once we get your accounts paid off it will counteract it and your score will shoot right back up. *
  • Accounts will be removed from credit report. *


  • It will absolutely not hurt your credit. *

Will You Be Able to Help Me Increase My Credit After I Finish The Program?


  • After you get out of the program you have nowhere to go but up.
  • What is going to get you back up and getting you credit worthy again is getting your debt to income ratio back in line and that’s what we work on. *


  • Shows up with a real positive effect. *
  • Credit score shoots right back up and you should finish the program with a higher credit score. *


  • Credit score will be better than when you start the program. *
  • Our program helps you get your credit score up to where it is now or even higher. *

Will Creditors Remove Accounts From My Credit Report?


  • Will say negotiated 0 balance which is a good thing. *
  • You don’t want it to come off and it will stay on as a positive, not a negative. *
  • It shows you are in good standing with that creditor again and that’s a positive thing. *


  • Once paid off accounts will absolutely be removed from your credit report. *

Here Are Your Debt Relief Options.


  • Borrow money.
  • Bankruptcy. I never refer anyone to that. Most people have to file Chapter 13. Chapter 13 payments are higher than ours and most people can’t afford it. *
  • Consumer credit counseling program but program takes up to seven years. Most people don’t finish.
  • Do nothing.
  • Attorney debt negotiation is the least expensive and quickest way out of debt. *
  • There is no way anyone could come to a logical conclusion that debt settlement is the least expensive and quickest way out of debt. Of all the solutions, a Chapter 7 bankruptcy would be. It costs less than $1,900 and eliminates debt in a few months.


  • Consolidation program.
  • Attorney negotiation.
  • Loan.
  • Chapter 7 bankruptcy.
  • Chapter 13 bankruptcy.

What About Bankruptcy?


  • None of our clients consider bankruptcy. *
  • Go with us to try to save their credit.
  • Bankruptcy will destroy your credit for the rest of your life and will stay with you till you go to your grave. *

Credit Counseling and Debt Consolidation Are Similar to Bankruptcy.


  • Once people do their homework they don’t want to do credit counseling. *
  • It shows up on your credit report for 7 to 10 years. *

Bankruptcy May Not Work For You.


  • Realistically you would not qualify for a Chapter 7 bankruptcy but it is in your favor that the banks don’t know this. *
  • Huh?

How Does The Money Get Paid In?


  • Drafted out of checking account and go into a FDIC account.
  • Attorneys have no control over the account.
  • The fees are authorized to come out of that account in the beginning of your debt settlement program.


  • NoteWorld and Keystone Bank will draft your bank account.
  • Once a month your account will be drafted.
  • NoteWorld charges you a $45 monthly fee for their services. * (The actual NoteWorld fee is $12.50)

How Much Does This Program Cost?


  • 12% fee.
  • $37,916 payback based on $70,000 of initial debt.


  • 10% fee.
  • $41,620 paid back on $80,000 of debt based on 60% debt reduction.
  • Instant savings of over $38,000.
  • 40% of $80,000 is $32,000 so paid back amount includes $9,620 in fees.
  • No prepayment penalty.
  • If you go with the $800 payment you’ll make $800 in cash available each month to you.


  • Flat 15% fee of total debt.
  • No upfront payments.
  • First three payments go to the law firm.
  • Payments after that are split between the law firm and the trust account.

Where Do My First Payments Go?


  • First three months do not go into my escrow account. *
  • Attorneys doing bulk of work in first 90 days. *
  • First three payments go directly to the actual attorneys. *

Can I Cancel and Get a Refund?


  • You can cancel at any time.
  • This is not a contract this is an actual agreement. (That makes no sense.) *
  • We have a great rapport with the creditors.
  • All the money in your escrow account minus what the attorneys have done for you while you were in the program.


  • You can cancel anytime you want to.
  • It’s not a a contract, it’s an agreement. (That makes no sense.) *

Creditors Don’t Lose Money With Attorney Debt Settlement.


  • They’ve got the interest you paid them for years, they get the 40% from us and then they write the rest off on taxes.
  • Creditors don’t lose a dime by doing debt settlement. *

How Much Will I Save in the Program?


  • Based on $70,000 you will save $32,000.
  • Long term you will save over $100,000. *
  • You can look at your credit card statements and see how long it will take to get out of debt with the creditor if you don’t go with us.

Does Debt Settlement Help My Credit?


  • It will effect the payment history portion of your credit but since payment history is only 1/3 of your credit score so it doesn’t kill you like creditors want you to believe. *
  • Debt to income ratio is more important than payment history. *
  • When you finish with the program you will be in much better shape financially than you are right now. *
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What Are The Program Advantages?


  • It will reduce monthly payments and have more disposable income. *
  • Out of debt in three years instead of 50.
  • Credit will bounce back.

Do I Need to Worry About Being Sued in the Program?

J-Being Sued

  • You have an attorneys office and they can step in and stop lawsuits from happening. *
  • If they threaten to sue and we can step in. *
  • If they get a judgment we can include it in the program.
  • We don’t represent you in court.
  • Threats of being sued are just scare tactics. *
  • They have to make an attempt to collect the debt so they can write it off. *


  • Your attorney will help you out in court if you are sued. *
  • Send notice of being sued to your attorney and they will contact the creditor to keep it going to court.
  • 10 times out of 10 if you go to court the judge will say you are trying to make a payment arrangement with the creditor. *
  • Worst thing they can do is get a judgment and then your attorney will negotiate that debt. What happened is the judge just made the creditor take a negotiation. *
  • At that point the judge will give you the negotiated price. *
  • They may be able to get a lien on your house and that just means if you sell your house and you have equity you can pay the lien from the equity.
  • They can’t take your wages at work. *
  • If you never sell your house, nothing ever happens. *
  • The lawyer does not need to go to court with you.
  • We will tell you what to say, how to say it and who to present it to.
  • If you ask the attorney might go to court with you. *


  • Less than half of 1% of clients ever get sued. *
  • After a judgment is 90 days old the attorneys will go in and settle it. *
  • Sales rep makes no mention that a wage garnishment can follow a judgment.
  • A judgment is a slap on the hand. *
  • None of my clients even show up in court. *
  • Don’t show up at court and agree to anything with creditor. *
  • It’s just a judgment just a slap on the hand, it’s not a big deal and lose sleep over it. *


  • None of our clients show up in court. *
  • If you don’t show up it will be a judgment by default.
  • You shouldn’t need to worry about wages being garnished. *

Do You Start Negotiating Immediately When I Join The Program?


  • Unlike a debt settlement company that waits to contact your creditors. We actually contact your creditors within 72 hours and negotiations start from there. *


  • We start negotiating with your creditors within 72 hours. *


  • We will start getting involved after 72 hours in the program.
  • We will send your creditors letters letting them know the law firm is representing you.
  • Then they wait till the accounts are 4 to 6 months delinquent before they start to negotiate. *
  • Attorneys get involved within 72 hours after your first draft date. *

Do You Send Letters to My Creditors Telling Them Not to Contact Me?


  • Sending cease and desist letters to your creditors is what you don’t want, you’ll get sued immediately.

C-Creditors instructed to Contact Attorneys

  • Attorneys will send letters out to creditors after you start the program and the letters tell the creditors to not contact you anymore and instead call the law firm.
  • The less you talk to your creditors, the better. *

Do the Creditors Have Insurance That Pays Them When I Don’t Pay?


  • I don’t know.
  • But I know why they don’t lose money is because they got the interest you paid for years, they get the 40% from us and they write the rest off on their taxes. *
  • They are not losing a dime by doing this. *


  • Every credit card has bad debt insurance. Once you default for at least 30 to 90 days the creditor can collect on the original debt owed on the accounts from the insurance company. *
  • They get the full payment from the insurance company plus the amount of your settlement. *
  • We want the creditors to contact you in the first 120 days but it is part of the process so they can legally show they contacted you in order to get the insurance. *

Here is How You Can Avoid Speaking To Your Creditors.

M-Avoid Creditors

  • 100% of our successful client probably choose to not speak to your creditors. *
  • We will give you a telephone number you can give to your creditors and make the creditors call us instead of you.
  • Change your phone number.
  • It is in your best benefit to let the attorneys handle the calls for you.

What to Do to Get Started.


Do You Have a Question You'd Like Help With? Contact Debt Coach Damon Day. Click here to reach Damon.
  • Decide if you want to do this and we’ll put the agreement together between you and your attorney.
  • You will have a debt specialist assigned to you.

Can Military Members Enroll in the Program?


  • You can’t declare bankruptcy when you are in the military. They won’t allow it. *
  • We can’t enroll military personal or payday loans.
  • The statement that the military does not allow members to go bankrupt is not true. The military has stated they would rather see members go into bankruptcy than be late or default on debts. Read this for more information.

What Good Can Come From These Attorney – Debt Settlement Company Relationships?

There is no good, except personal financial gain at the detriment of consumers, that can come from a relationship between a marketing company or affiliates selling debt settlement services and a lawyer with a license to practice law to lose.

Even if it was permissible for an attorney to front a debt settlement company to circumnavigate the laws regulating debt settlement services, it just makes no logical sense to take the risk and entrust the license to practice law to sales representatives and affiliates that are motivated to make the sale at all costs and provide unsupervised and questionable representation that can lead to dire consequences.

I contacted a few debt settlement company executives that had affiliate relationships in the past but discontinued them due to problems with trying to watch over the external representation by others. Here is what those companies had to say, and attorneys, please listen, they speak from experience.

It has been our experience in the last 10 years that when you have outside representatives or affiliates you lose control of the expectations. Specially in the last 3 years with the growth of the industry made up of hard closing, sub-prime mortgage guys that I have found will say things that may not be accurate in order to enroll a client. That is another fundamental problem with the Advance Fee Model-It encourages enrollment more than performance or results. Therefore a client often has huge expectations and end up not experiencing the success possible.

Debt settlement sales has been a BOOMING business! The selling of debt
settlement however, was doomed to fail the consumers being sold into it as well as the back end service providers the sales affiliates push their customers to.

Here is why:
Sales guys sell. That is their function. Unless they are being heavily supervised by the actual provider of the settlement services for accurate and complete representations, the greed factor to make a commission is far too overwhelming.

The companies lose:
Settlement companies that use outside affiliates to sell their wares are generally the ones whose customers are screaming scam on the internet, filing complaints with state and federal regulators, and voicing their displeasure in the media. These companies are getting shut down and the shut down has only just begun. They are forking over sometimes as much as 70% of the client fee over to sales affiliates who amount to nothing more than high paid hucksters! In return they get…. nothing. Unless you count grief as something.

The consumers lose:
Consumers ill suited to attempt settlement are sold a pipe dream by the sales affiliates and lose precious time and resources that could have been expended toward a better option to deal with debt. Not EVERYONE should try settlement! People are better off in bankruptcy, especially chapter 7, than trying debt settlement that was sold to them by “slick rick”.

The majority of misleading ads on television, radio and the internet are paid for, and promoted by, the sales side of the debt settlement industry. The guys selling it are the ones without a vested interest in a consumer’s success nor do they care if the company they refer their customers to survives. If a settlement company goes down that they pushed their sales to, they just find another one and its “game on” all over again. I have been watching this play out for years.

Affiliates and outside marketers bring even greater exposure to the pitfalls of some practices of debt settlement firms. The relationship between a DS company offering back end service with an affiliate office is not the same as a net branch that you find in the mortgage space or franchises like Edward Jones as each office operates entirely independent There is a cautionary tale for how these relationships will affect all parties. The indiscretions of one group will be the downfall of another and consumers are put at risk.

And if you are an attorney that is reading this right now and still does not think that tangling yourself up with a debt settlement company is a bad idea, just picture yourself explaining to your kids why you lost your license when the debt settlement marketing relationship crumbles and throws you under the bus, as it seems to always do.

Damon Day - Pro Debt Coach

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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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