A reader, now a beloved tipster (send in your tips here), sent in some questions about a San Antonio, Texas company, Debt Free Angels.
Here is what Shawn said.
“Debt is Gone Forever!
Debt Free Angels Guarantees that 60% to 80% of your debt will be eliminated forever .” – Source
In the video on the front page they say “the laws are on their side, we make sure they are protected”, “we help people to eliminate their debt, reduce their mortgages, clean up their credit and get back on track”. The video shows the major programs and they” eliminate 60-80% of all of the credit card debt” , loan modification where “everyone qualifies” and credit repair to “getting them qualified to purchase a home in 12 months or shorter” as well as how to save $6,000 to $10,000 on their taxes. They also say “lots of our services are free, some of the ones that you do pay for there is always a money back guarantee” There are no disclaimers on their site that I could see.
KSAT – Local Experts for Debt Elimination!
The Federal Trade Commission is on Mission to shut down Attorney based Telemarketers who APPEAR to be legit in settling debt.
We are the authentic Debt Elimination company supported by and promoted by local channel 12, KSAT. The new rules, as of October 27th, 2010, have put 90% of the companies out of business-the FTC is fining and often jailing those who have hurt so many familes across America.
We were already in complete compliance, and in fact have been since we started over 6 years ago!
We are Debt Elimintion with Integrity-we are Debt Free Angels-who do you know, that needs an Angel on their side? – Source
Shawn says, “Being in the financial industry, I have seen lots of these types of so call “debt elimination” companies making outrageous claims, but this one takes the cake.”
So Let’s Poke Around a Bit
It appeared that the points and links in Shawn’s tip were true and accurate so I decided to take a closer look at the site. What struck me at first were all the claims made on the home page. They seem to fly in the face of claims made by others that the FTC has pursued action against. I’ve marked some of the claims on the home page which are problematic in my opinion.
Here is my rundown of concerns.
- The video does make some interesting statements and dubious claims:
- “They don’t know there is relief out there, the law is actually on their side, we make sure they are protected”
- “We were running a collection firm and all of a sudden we found that people had run out of money three or four years ago. So I started looking into different ways we might be able to help them. And in that process I found all these buried government programs nobody knew anything about. So we flipped sides.”
- The number one mistake people make when managing their debt is that they are continuing to pay on their credit cards interest that they cannot afford to pay. If they are not able to get rid of their debt in a six month period on their credit cards they need to rethink their financial strategy.”
- “Our debt settlement program where we eliminate 60 to 80 percent of all of their credit card debt, medical bills, unsecured trade lines, credit lines, student loans, repossessions.”
- “We also do loan modification where we lower the interest rate on their existing mortgage where everyone qualifies.”
- “It actually clears up your credit record and says your loan is paid in full.”
- How do they know they are the #1 debt elimination company in San Antonio. Who is the independent auditor of that claim?
- Is all the debt enrolled in the program 100% guaranteed to be dealt with?
- They use the LocalExperts KSAT logo and mention it in the ad for credibility but on their KSAT page it clearly says, “KSAT’s Local Experts page on KSAT.com is provided only as a convenience and service to its users. This paid advertising is not to be construed as an endorsement by KSAT of any advertiser, product or service advertised herein.”
- Again, the best claim is made but that clearly appears to be unsubstantiated.
- It appears they are describing their debt settlement program but debt settlement is not a legal right. It is a negotiated agreement. If we want to talk legal then it should be mentioned that creditors have a 100% legal right to sue when you don’t pay.
- Boost your credit score appears to be a claim of credit repair and since some of the services are for a fee it seems to create trouble with the Credit Repair Organizations Act.
- They keep throwing around student loans as if they are easy to “legally eliminate” which is an unfounded statement.
- Debt settlement is not the path to avoid stress, lawsuits, nor even bankruptcy. When attempting to settle debts over a long period of time you will remain in collections, you can be sued, and bankruptcy, which is a legal tool, can eliminate 100% of your debt.
- No long term negative effect on your credit? When you fall behind on making payments to your creditors that will be reported for seven years on your credit report.
- Link did not work. Probably should have linked here.
- Appears to make claims the FTC specifically says are not allowed under the telemarketing sales rules about debt reduction and time out of debt. In order to make such claims all enrolled consumers must experience this result and costs must include enrolled debts plus fees.
They also put out the following video about their debt settlement program. The video makes some statements which concern me.
- “Debt settlement right now is our most popular program because most of America is terribly in debt. We are able to help people with student loans, credit cards, credit lines, repossessions, anything that is unsecured we can reduce it 60 to 80 percent.”
- “In some cases we can eliminate it entirely off your credit report. If they are already behind we can settle and get it pulled off the credit report really fast.”
- “If they are current we need to wait at least 90 to 120 days. But during that time we are very unique because we send out cease and desist letters and we stand in between the client and creditor. They can’t harass them, they can’t come to their home, they can’t go to their workplace, they can’t put liens on their houses, they can’t do any of the things they threaten to do, because it’s illegal.”
- “From the moment they enroll in debt settlement their is no more interest and no more penalties. They are not going to be harassed. ”
- “As each debt is settled we have it cleaned off their credit report. So that their credit should be improving as they go through the program. Our goal is to have their credit repaired better than it was before they entered the program.”
- Graphic: Clean your credit while eliminating your debt
Readers of the site will already know why these statements concern me. But for those unaware, the statements of debt reduction are against the FTC guidance on debt relief marketing unless they represent the collective experience of the company with every aggregated debt enrolled by all consumers. The statements of having debts removed off the credit report are disturbing. It appears to be an inducement for the consumer to potentially get trapped in a credit fraud situation when they latter use a credit report that has had true and accurate information removed. A cease and desist letter is almost a surefire way for a consumer to invite being sued by their creditor. And the letter has no power over the creditor which owns the debt, only third party debt collectors. Creditors can continue all collection efforts and that is entirely legal. Interest and penalties continue to accrue on debt settlement enrolled debts. Creditors don’t stop charging those just because a consumer elected to send their money to Debt Free Angels instead of their creditor. And again we have the disturbing statements of repairing credit for a fee that create problems.
One their bankruptcy page they publish the following chart.
The chart appears to be full of dubious claims and statements. It also makes no mention of the benefits of a Chapter 7 bankruptcy.
But to run down the claims on bankruptcy:
Upfront money needed: Not true. many bankruptcy attorneys do accept payment plans for a Chapter 13.
Expected to pay: There is no expectation to be able to repay debt. It is determined by your income and liabilities. Homes, if you keep making payments, retirement accounts and other debts are off limits.
Effect on credit score: Chapter 13 is reported for seven years.
Ability to purchase car: Your interest rate immediately following bankruptcy may be higher but you can lower than with a larger downpayment and or letting time pass.
Impact on employment: The military actually looks at bankruptcy as the more responsible step since it is a legal process that addresses the debt.
I have not even addressed their column which is just as defective.
Overall the chart and claims made by the site are wandering into dangerous territory. It would seem that any consumer that errantly enrolled in the program and obtained a negative result would certainly have grounds for a claim of deception and misrepresentation.
So Who Are They
According to the State of Texas there is no company registered to do business under the name Debt Free Angels.
Google shows the company is located here.
The property is described as “office warehouse. Approximately 40% office/showroom and 60% warehouse with HVAC throughout.” – Source
According to public information about Christina Randell, President & CEO she has, “been fortunate enough to now start 4 business that grossed over a million in their first two years.”
She was also the president & CEO of GreatBizSites Web Design. – Source. Since Debt Free Angels is listed using the same post office box as GreatBizSites, PO BOX 780367, San Antonio, TX, I’m left wondering if that is the corporation Debt Free Angels belongs to. But maybe my question was answered when I looked at the DebtFreeAngels.com domain name, which is actually owned by GreatBizSites Web Design and Christina Randell at 4337 Vance Jackson Rd, Suite 100, San Antonio, TX 78230.
GreatBizSites was cited by the FCC for making telemarketing calls to people on the National Do-Not-Call Registry. – Source
GreatBizSites, Inc. is actually a current and active Texas corporation. – Source
My advice, too many red flags, run away.