Debt Relief Industry Sued or Sanctioned

Persels and Associates Gets Into It With Kansas. Kansas Says Not Loving Attorney Model Debt Settlement.

The Topeka Capital-Journal is reporting an interesting development in Kansas regarding debt settlement.

I’ve bolded the most interesting parts of the article below. But this case may be of significant interest for those staking a future under an attorney model to conduct debt settlement activities.


You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.

A Maryland-based company conducting debt settlement activities in Kansas has challenged the authority of the State Bank Commissioner’s cease-and-desist order that would close its operations in the state.

The company, Persels and Associates, is one of two companies accused of violating the state’s Credit Services Organization Act by the Kansas Office of the State Bank Commissioner.

In a suit filed on Sept. 9, Persels sought an injunction in Shawnee County District Court barring the state from restricting the company’s Kansas operations. Persels argued that the Kansas Banking Commissioner was acting outside his authority in attempting to regulate attorneys — an area that is the responsibility of the Kansas Supreme Court, Persels said in its suit.

“It is stunning and, frankly, disappointing that the State Bank Commissioner in Kansas would try to take such a regulatory stretch when clearly the regulation of attorneys lies solely with the Kansas Supreme Court,” said Neil Ruther, founder of Persels and Associates.

“We practice consumer and debtor law in 48 states and have never seen such an action,” Ruther said in a statement. “And what makes it even more troubling is the fact that the Banking Commissioner has not given us the name of a single client who has complained, nor given us the opportunity to resolve any such complaints.”

A ruling on the request for an injunction is still pending from District Court Judge David Bruns.

READ  Persels and Associates Was Supposed to Take Care of My Debt

The Bank Commissioner’s cease-and-desist order alleges that both Persels and Consumer Law Associates, LLC, of Frisco, Texas, engaged in debt settlement activities with Kansas consumers in violation of Kansas laws. Specifically, the agency’s order alleges the companies and owners:

— Delayed payment of consumer’s debt to increase cost, fees, or charges payable by the consumer.

— Misrepresented material facts or made false promises intended to induce consumers to enter into debt services agreements.

— Engaged in fraudulent or deceptive acts or practices in connection with the offer or sale of services of a credit services organization.

— Structured debt management service agreements in a manner resulting in a negative amortization of consumer debts.

The order seeks restitution for consumers and a fine of more than $8 million and seeks to prohibit the companies and their owners from continuing to engage in such business with Kansas consumers.

“We’ve seen this so-called ‘attorney model’ in several of our investigations of illegal debt settlement activity. We believe some companies have attempted to organize themselves in such a fashion to claim an exemption from oversight by our agency, depriving Kansans of the protections in the law”, said Kevin Glendening, Deputy Bank Commissioner.

“Generally in debt settlement schemes, promises are typically made to consumers to help reduce debts, stop collection efforts, improve credit ratings, and so forth. Companies may claim to be exempt from oversight due to the involvement of a local attorney.

“However, our agency believes many of these companies simply ‘rent’ the local attorney’s law license in an attempt to avoid the consumer protections contained in the law, including limits on fees and charges,” Glendening added. “In some instances, consumers never speak to or meet with the attorney. Typically, the attorneys do not appear in court on behalf of the consumer if they are sued by their creditors. It can delay the court process and certainly cause great harm to consumers.”

READ  Maryland to Hold Important Hearing on Debt Settlement. Persels & Associates is Said to be Adamantly Opposed.

Ruther said his company sought injunctive relief after attempts to reconcile differences with the Bank Commissioner’s office were unsuccessful.

“Our firm has offered to review individual cases, business practices, any consumer complaints or other specific items of interest to the regulatory body. None of those overtures were accepted,” Ruther said. “Instead, we asked the court for intervention and now the state regulators have responded with this action that puts our clients at risk. It is a very disappointing turn of events.”

Consumers with complaints or concerns about debt settlement companies are encouraged to contact the Office of the State Bank Commissioner at 1-877-387-8523 or at 700 S.W. Jackson, Suite 300, Topeka, Ks. 66603.

I can always use your help. If you have a tip or information you want to share, you can get it to me confidentially if you click here.

About the author

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.


  • You want a specific client who was recently enrolled into a state that a non-compliant company is working in.  Refer to Vanisha’s post.  Her home state is in Louisiana.  She recently signed up with Persels and Associates/Care One.

    Louisiana state law/code RS 14:331

    Prohibition of debt adjusting when conducted for profit.  Section shall not apply to (1) situations involving debt adjusting incurred “INCIDENTALLY”  in the lawful practice of law in this state.  I emphasize “Incidentally”  because this means “not intentionally”.  It looks to me that Persels/ Care One intentionally does business in La.

    What is also interesting, that in the letter proposed to the FTC, Care One states; “provides credit counseling and debt management services in 37 states.

    Then you see AACC Care One member say they provide DMP and DS plans across all 50 states.

    and of course they came back saying they stopped doing ds in 3 states, likely, IL, KS and now WA.  but even though they advocate transparency they never put their state list in writing.  Why not?  Just saying that when you piece this all together, it just looks shady.  Don’t you think?  Also, why would they not tell the FTC that they offer Debt Settlement plans across all 50 states? And say that they are licensed in 37 states.

    If they are using their state license as Care One to offer DS services in the “states that do not require legal services to settle debts” in, do they really negotiate with the same creditors that extend them interest rate benefits for the credit counseling clients?  Are creditors now willing to extend interest rate reduction benefits to credit counseling companies that also settle under the same name?  I would never think that a creditor would do that…

    Also, I was unaware that states clearly say that they “require an attorney to manage the settlement process”

    Let’s play, “do they comply”!

    • I’ll gladly ask CareOne for a comment. Just to clarify, the last statement I posted from CareOne said they service DS clients in all but three states. I’m waiting for the state update to update that page you referenced.

      What date did the Vanisha you refer to enroll? Help me to understand how she is a recent client as you state.

    • Tom,

      I was going to email this to you but I’ll just post it here.

      I’ll gladly confront CareOne with a specific current client they’ve enrolled. I have no problems doing that but for goodness sake, you’ve got to give me some specific facts about the client (date enrolled, etc.) or feel free to email Mike Croxson directly. You know where his email address is.

      Trying to pick a point back in time and nailing down what the facts were back then is damn near impossible.

      Welcome to what I have to deal with everyday.

      I need a specific example and all the facts to confront CareOne with.

      Get me that, please.

    • I think you’ve hit the nail right on the head there. The major banks and asset acceptance firms would never tolerate having to settle for less than full balance from the one hand, while they are getting payment in full from the other.  Unless… they know something we don’t, such as the settlements don’t often hold up in court anyway.  Or debtors almost never finish paying on them.  Or both.  Or something we haven’t figured out yet.

      But I don’t think “incidental” means “unintentional” I think it means “ancillary” like when you compromise the medical expenses for your client in a personal injury case.  But you’re right, debt settlement is the PRIMARY purpose of the contract.

      It is shady, and I doubt Steve will go to his grave thanking God he has a relationship of whatever kind with Mike Croxson.  But that’s his business.  He lets us air our views on his website and I got nothing to say after thanks.

    • So I talked with Mike Croxson at CareOne about the comments here. Here is what he said.

      “It is CareOne’s position that all the partners we work with to best assist consumers meet all regulatory and compliance standards.

      If there are ANY concerns that arise over these maters we appreciate people bringing them to your attention so they can be addressed.”

      I also got a contact email at P&A to continue exploring this. I’ll email this post and thread to them and ask them to comment. Mike Croxson is also watching their response here.

      A specific example backed with pertinent facts though would be awesome though to use to look at.

    • Tom,

      As I said I would do, here is the response to your statement from Persels & Associates.

      Persels & Associates LLC is an independent law firm. It and its affiliate firms have been providing low cost unbundled legal services to people who cannot afford traditional legal representation for over 14 years. The firm has 170 lawyers in 49 states.  It is not lending its law licenses to anyone and it does not participate in what “Gerkey” calls a “lawyer model” of debt settlement for non-lawyer firms. We establish an attorney client relationship with all of our clients which trigger all of the responsibilities and safeguards which arise as a result of the strict regulation of members of the Bar.

      Our attorneys provide legal guidance to clients concerning their debts. We advise them of all of their alternatives, including bankruptcy.  If our clients are sued we guide them through the process of defending their interests including the preparation of legal pleadings, discovery documents, exemptions from execution and motions practice.  Our lawyers often negotiate directly with creditor’s attorneys for settlements of claims and they issue instructions to a staff of well-trained negotiators at our administrative service company. We have a division of lawyers who investigate and prosecute claims of violations of the Federal Fair Debt Collection Practices Act and the Federal Fair Debt Reporting Act on behalf of our clients. We also offer consultations on bankruptcy and if that becomes the preferred option the firm will prepare and file bankruptcy cases in most parts of the country.

      Persels & Associates employs CareOne on a fee per client basis to provide certain non-legal administrative services to our clients.  We do so because of the very high quality of their work and because it significantly reduces the cost of providing legal services to our clients. CareOne does not give legal advice. It does not provide legal services to our clients except at our direction and subject to our supervision. Many traditional law firms have seen fit in recent years to contract out many services, some to providers in foreign countries. At last report it was a $4.5 Billion per year industry. The profession has ruled these outsourcing arrangements to be within the rules of ethical behavior and generally in the interests of clients because they offer lowest possible costs for services. (See, Timmons, Heather, Where Lawyers Find Work, New York Times, June 3, 2011)  

      Our firm has been a leader in providing unbundled low cost legal services to people who are economically foreclosed from the legal system for years. We are proud of that record and of our association with CareOne whose technology and expertise make the delivery of these services possible.”

      Neil J Ruther, Managing Member, Persels & Associates LLC

      • It would be great to understand exactly how clients get entered into Persels and Associates Debt Settlement Program?  Steve, can you get Persels to explain how this process works or do you know how this is done? Who is the client speaking to first? 

        Who does the advertising to have the potential client enrolled into Persels Debt Settlement Program?

      • Also, everyone may want to read the source Neil references about legal outsourcing.  Here is the article:

        “In the United States, outsourcing companies are hiring lawyers from
        temporary legal services firms or recruiting them directly out of law
        school. The pay is often comparable to lawyers’ salaries in smaller
        cities. And the jobs can come with other benefits, like equity stakes in
        the company and management opportunities that might not be widely
        available at conventional law firms. ”

        So in this type of “debt settlement attorney model” that Persels has structured (please let’s call it like it is), who is doing the outsourcing?  Is it Care One/Ascend One that outsources their legal work to a law firm, or is it Persel and Associates who outsources their non-legal work to Care One.

        The article-Where Lawyers Find Work is intended to give light on huge firms that hire newly graduated lawyers from law school to handle document preparation and review.  No where does it mention non-lawyer firms handling the outsourcing of legal work for major attorneys.

        Also, last time I checked Care One specialized in credit counseling, not legal outsourcing.

  • Someone needs to really stop Persels & Associates.  I filed a complaint against Persels & Associates with the Attorney General’s Office in Maryland and in my home state of Louisiana.  They never responded to the Attorney General in Louisiana but they lied to the Attorney General’s Office in Maryland saying that I gave them the wrong information and I was an unsatified customer.  Yeah I’m unsatisfied when you tell me that you couldn’t get in contact with one particular creditor but that same creditor files a lawsuit against me and had my wages garnished for over a year.  I told Persels & Associates about the lawsuit and the Louisiana Attorney assiged to my case, Provanda Kennedy, told me that I had this company listed on my debt consolidation and they needed to contact Persels & Associates.  Not only did Persels & Associates never contacted the creditor, the judge didn’t want to hear nothing but “do you owe this debt” and shoved me to the side and sided with the creditor.  Now, another creditor they told me was paid has now threatened a lawsuit against me.  PERSELS & ASSOCIATES NEEDS TO BE STOPPED NOW!!!!

    • If you feel the Maryland attorney lied to you you should submit a formal complaint to the Maryland Bar against the lawyer.

      The judge has a point, no intervention except bankruptcy is going to change the contractual relationship between you and the lender unless their is a mutual agreement.

      • Steve Rhode, why do you continue to support businesses that are engaged in deceptive and unfair trade practices such as Care One and Persels and Associates? 

        These attorney models are misrepresenting consumers and will continue to do so until they are stopped by regulators across the country.  At no point is any client ever represented by an attorney, it is all done by Care One and their customer service center.  Steve, you cannot deny how there model is structured, yet you continue send clients to them.

        • Gerk,
          I am no settlement company sympathyzer, but what do you have to offer as an alternative to what happens to consumers in a settlement program as administered by the typcial settlement company?

          • I’m not sure I understand your question. Are you asking about an alternative to debt settlement or an alternative to when a debt settlement program goes bad?

          • I am asking Gerk to point to an alternative for consumers that is not the same as jumping from a pan to a fire for debt help. How is settlement as available through the company thread topic different than what he would suggest for a settlement service?

          • Guest, anyone has options to eliminate their debt.  It just depends on what option is best that suits their financial hardship or their goal.  Its really simple, for those who are current on their bills, have high interest rates, understand that their monthly payments are going to interest, and they do not want to fall behind on their bills-Credit Counseling should be there best option as long as they can afford the minimum required monthly payment that creditors are willing to accept.  For those who may already be a month or two behind or something has happened to prevent that person to continue making the mandatory monthly minimum- Debt Settlement may be their best option ultimately avoiding bankruptcy.  A person entering into a debt settlement program needs to understand that while enrolled into this program they know there monthly payments are not going to the creditors and will have a negative impact on there credit score.  Those who are unable to maintain a monthly payment on a debt settlement program and has little to no assets-Bankruptcy may be there last resort best option.

            Guest, you have to understand that there are different options for different situations, not one solution fits everyone’s situation.  I am just shedding light on the fact that Steve Rhode directly supports models that engage in deceptive and unfair trade practices and could potentially bring harm to any consumers that where referred to these companies.  The attorney model has and will continue to be challenged, no matter which model it is.  The model is utilized for the sole purpose of avoiding state laws, regulations and licensing requirements.  Consumers are given a false sense that it is the law firm that will negotiate on the consumers behalf and that they are being represented by the law firm.  The law firm or even the attorney in the state has little to no involvement with the person enrolled into the program.  They sign off on client files and collect monthly checks for companies to use there name.  If any debt relief company, any credit counseling company or law firm that regularly engages in debt adjusting and really wanted to have the best interest of consumers in mind would actually get licensed to do business in the states that require the license.

          • I was with you through most of the first paragraph but in the second. Kaboom!

            Let’s get to your accusation about me. I’ve asked you to supply me with a specific example of a consumer that was referred and enrolled with a non-complaint company. You have not. So let’s cut that crap out till you can identify someone and I can investigate the issue.

            I’m with you on the advanced fee attorney model. I don’t like it. In fact I’m currently working with an insider at one such firm to expose what is really going on with those models.

          • Ugh, I was with you until the last sentence.  I don’t think licensing helps the consumer one bit.  It helps the government by looking like they do something.  It helps licensed companies because it discourages complaints.  But the consumer has a new layer of apathy set between her and her rights.

        • Are you outraged at the attorney model, advanced fee attorney model, CareOne, Persels, or something else.

          I have certainly been very critical of advanced fee attorney models. I have no referral relationship with CareOne.

          As I’ve offered to you before, if you have any issue with CareOne, please feel free to email their president Mike Croxson directly. I’ve even shown you where to find his email address.

          • “I have no referral relationship with CareOne”?  You have a direct connection with the AACC members do you not?  And if people have questions or may need debt settlement help you can point them with your website to the AACC right?  Here is a direct link to advice that you provided.  In this advice you state:  “For debt settlement solutions I suggest you talk to one of the AACC member companies.”  Call me crazy, but that to me looks like a direct referral to AACC members. direct link:

            Do you support Care One’s debt settlement program which is Persels and Associates?  Yes or no?  Simple question.  This is not a courtroom…cant plead the 5th. 

            To answer your question, I have an issue with the deceptions and misrepresentations that attorney models have in general.  Just an example, consumers will feel like they are truly being represented by an Attorney in the state that they reside when they never are or ever will.

            Just like your industry article you just wrote about the AFCC, I have given you substantial information to show you that Persels and Associates is not licensed nor exempt from attorney exemption status to some state debt adjusting laws and could potentially be harmful to many consumers like those in Kansas, soon to be Maryland and Washington State.

            So again, Steve Rhode, why do you continue to support Care One and Persels and
            Associates, knowing they are violating state debt adjusting laws? 

          • Bring me a specific example of a current state CareOne services is working with new clients through P&A and I’ll gladly bring that specific example to the attention of CareOne for a response like I have done before.

            All I’m asking for is the state, why P&A would not be eligible to provide services there and some sort of confirmation you can get that they are currently enrolling clients there.

            I’ll chase it down for you but you’ve got to be specific for me in one statement of facts so I can ask for a direct answer to your concern.

            You’ve got to help me to help you find the answer you are looking for.

    • If you have a letter that says one of your debts has been settled, but the creditor says it has not, you should take that letter to a lawyer of your own right away.  Your debt settlement company may be held responsible for your losses.  If your money has been used to pay a creditor for a settlement, but the creditor says they never settled, you should go to the attorney regulators of your state right away.  Many states have funds to repay the victims of this kind of fraud.

Leave a Comment

Scroll to Top