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Claims of Fraud by Debt Relief Companies Soaring

By on January 29, 2010
Claims of Fraud by Debt Relief Companies Soaring

Attorney General Bill McCollum announced this month that his office is investigating the unregulated debt relief industry. Until he can persuade lawmakers to impose rules, McCollum hopes lawsuits his office has filed and its investigations “send a message to this industry that preying on consumers in financial distress will not be tolerated,” according to an Oct. 15 statement.

The Attorney General’s Office has filed five lawsuits and is reviewing or investigating more than 30 others, including one involving Outreach Housing LLC, a Broward County company that does business in Palm Beach County.

More than 100 of the 600 homeowners who filed complaints said Outreach Housing told them to make a partial mortgage payment of 60 percent to the company, which would work with lenders to reduce their mortgage debts. The company failed to do so, according to the Attorney General’s Office.

That scheme is typical of debt relief fraud. The solicitations come in the mail, appear in newspapers and on the Internet, at bus stops and, most frequently, in telephone calls to a debtor’s home. The company offers to reduce interest rates, modify loans, set up reduced payment plans or settle debts for pennies on the dollar.

Clients are charged hefty upfront and monthly fees and told to stop making payments to creditors and instead send the payment to the debt relief company. Few or no payments or negotiations occur and clients are left with more debt, damaged credit and, often, higher tax bills.

Claims of debt fraud soaring Palm Beach Post,  United States – 2 hours ago As for her credit card debt , the company "made a couple of calls" and came back to her with a proposal to make a reduced, lump-sum payment of $5000 – an …

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Source: Claims of debt fraud soaring – Palm Beach Post

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About 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.

One Comment

  1. ET

    October 20, 2009 at 2:50 am

    thanks for teh article

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