Legal Helpers Debt Resolution Contract Review. Is This Really The Best Deal Possible?

A tipster (send in your tips here) sent in a copy of what appears to be an agreement between a consumer and Legal Helpers Debt Resolutions Services. – Source

What follows are just my observations of some of the pages of this agreement. You may view the entire agreement here.



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The budget looks especially light and while there is a car involved, as evidenced by the amount for auto insurance, there appears to be nothing for gasoline or maintenance of the vehicle. There is no amount specified for miscellaneous expenses. I’ve never met anyone that did not spend some money for miscellaneous expenses.



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Client has agreed to enroll in LHDR’s Debt Negotiation program to resolve Client’s unsustainable unsecured debt burden (the “Project”).

Is the debt unsustainable based on the budget and the fact a number of the creditors are collection companies and most likely not getting monthly payments at this time?

The scope of engagement says “LHDR structures its practice as a group practice. LHDR does not guarantee any minimum level of participation in a case by any individual employee, member, attorney, paralegal, or partner of the firm.”

This appears to say that nobody is obligated to participate in the case if they don’t want to.

In the even that Client is sued by a creditor on one or more of the Enrolled Debts and such lawsuit(s) was served on the Client on or after the effective date of this Agreement, LHDR will provide litigation support services for Client to facilitate a settlement of the debt at issue within LHDR’s Settlement Standard (“Litigation Support Services”).

The agreement describes the actions that may be taken on behalf of a sued client.

  1. The debt will be prioritized;
  2. a 65% settlement will be attempted; (It appears to be the obligation of the consumer to pay the settlement even if there are insufficient funds accumulated in the savings account at the time of settlement.)
  3. settlement offers will be communicated to the lawyer suing client;
  4. filing responsive pleadings or other documents LHDR determine are warranted;
  5. representing client in required court hearings; (Not sure what that includes. What is a “required court hearing?”)
  6. telling client not to fight the lawsuit or enter into a judgment; and,
  7. represent client at trial in cases where LHDR can’t get a settlement of 65% of the debt (including principal, interest, costs, penalties, and late fees) and client has a valid legal defense against allegations made in the lawsuit. (I don’t think voluntarily agreeing to stop paying the creditor is a valid legal defense. Do you?)


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The actual settlements shall be subcontracted out to third parties including negotiations with creditors and collectors and certain customer support responsibilities.

This appears to say that work may not be performed by attorneys and may be subcontracted out to other groups other than LHDR. The subcontracted service appears to be Legal Services Support Group (LSSG) as you will see on the next page.



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A fee of 15% of the debt enrolled will be paid to Legal Services Support Group (LSSG) who do not provide legal services.

There may be no attorney-client relationship between Client and LSSG in regard to these services and any specific communications between client and LSSG may not be protected by attorney-client privilege.

Litigation fees and costs shall be the responsibility of the client, “including the payment of any court filings fees or any other fees and costs associated with the litigation. In the event a litigated matter proceeds to trial, Client shall also be required to pay the costs associated with LHDR’s trial preparation, which the parties hereby agree in advance shall be set at $350 per trial (the “Trial Cost”).

So it appears the upfront retainer paid does not cover all possible costs of legal representation.



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If LHDR negotiates a settlement with a 35% reduction of the debt and the client does not have the funds on hand to settle the debt the agreement with LHDR may be cancelled and no refund given. It seems that in the first few years the amount of money saved in the reserve funds would be insufficient to be able to accept many, if any settlements.

This minimum standard provision does not apply to any Client’s individual accounts accepted into the debt resolution plan which have balance transfers, cash advances, accounts initially accepted with balances fewer than one thousand dollars or where there has been a lawsuit filed on such individual account.

In this client agreement the person has 16 debts they are including but 10 of those debts would appear to fall outside the minimum standard provision for service. That’s 62% of the debts for which there is no performance guarantee.

The Agreement can be cancelled by LHDR if the Client fails to cooperate with all reasonable requests of LHDR, fails to pay additional legal fees and service costs, fails to pay additional court fees and trial costs, fails to accept reasonable settlement offers, or client does not agree to let LHDR withdraw from litigation representation.



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Not engage in debt resolution discussions with creditors and collection agencies who call them.

LHDR does not want the Client to communicate with their own creditors.

Notify LHDR in writing by email, email, or fax if Client directly receives settlement offers from any Creditors.

Even if the creditor contacts the Client directly and makes an offer, the Client will still owe the full fee due to LHDR on this debt.

Expect that, on occasion, personal involvement in the negotiations and settlement process is needed as part of the representation and such personal involvement does not change the terms, including fees, in this Agreement.

So it appears even if Client has to negotiate their own settlement or participate in settlement negotiations the full fee will be due LHDR.



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LHDR’s debt negotiation may not prevent creditor or collection agency harassment, nor prevent phone calls on behalf of creditors or collection agencies to Client;

Client will continue to incur late fees and penalties on the accounts;

Client’s participation in the program may adversely affect the client’s credit score;

Enrolling in the program will not stop collection calls or calls from creditors, fees and penalties will continue to be added to accounts and the balances will grow, and the program will hurt the credit score.

Client’s nonpayment, minimal payments or settlement payments to creditors may result in derogatory credit information being transmitted to the major credit reporting agencies…”

Client’s nonpayment to creditors may result in a creditor filing a lawsuit to recover the amount owed to them and the timing of such lawsuit may impair LHDR’s ability to settle the debt since this accomplishment is contingent upon, among other things, the amount of funds Client has available for such settlement.

So participation in the plan will result in bad credit and can result in the consumer being sued.



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LHDR cannot and does not make any guarantee of any kind regarding the success of any negotiation in regard to such modification.

No guarantee.



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The proposed 42 month program will cost the consumer:

Retainer: $900
Service Fee (15%): $2829.75
Legal Admin Fee $50 per month: $2,100
Banking Fee (10.25) per month: $430.50
Total Fees : $6,260

The total fees paid represent 33% of the enrolled debt. Remember that 62% of the enrolled debt does not fall under the minimum performance standard, but if it did the client should expect the following results:

Original Debt: $18,865
Performance Standard Reduction of 35% of the debt: -$6,602
Debt Paid Sub-Total = $12,263

But if we add back in the cost of the service the total debt repaid would be $18,523. That would represent a savings of 2% off the original balance.

But let’s not forget that the original balance is going to continue to accrue fees, interest and penalties until it is settled. Some in the debt settlement industry project that can increase balances by as much as 20% but for the calculation below I’m only going to assume it increases the balance by half that amount.

Original Debt: $18,865
Fees, Interest, Penalties 10% increase: $1,886
Total Debt Settled = $20,751
Performance Standard Reduction of 35% of the debt: $7,262
Debt Paid Sub-Total = $13,489

So let’s add back in the fees of $6,260 which would give us a total repaid of $19,749. This represents an amount more than the original balance.

If we project that the consumer was able to get reductions of 50% on all included debt the program would cost $16,694 and represent a savings of 12% off the total debt owed and would take 42 months to achieve.

If the same client was eligible for a Chapter 7 bankruptcy to resolve unsustainable and untenable debt it would cost about $2,000, take three months, and result in a 100% elimination of debt.

These projections do not include any of the additional court costs or legal fees that might be charged along the way.

According to the fee schedule, at the end of the first year of participating in this program the consumer would have only $1,379 saved towards settlements.



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Legal Helpers Debt Resolution is using Global Client Solutions as their third party escrow company.

Summary

If there is anything you feel I did not interpret correctly or unfairly I invite you to post your assessment of that section in the comments below.

If any of the images are difficult to read you may want to look at the original source document.

So what is your assessment of this debt relief agreement? Is this a good offer for consumers to explore to get out of debt?

Sincerly,


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.

Damon Day - Pro Debt Coach

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.

Steve Rhode
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28 thoughts on “Legal Helpers Debt Resolution Contract Review. Is This Really The Best Deal Possible?”

  1. Global Client Solutions and World Law — My experience.
    First OFF stay away from both of these companies.
    I had two debts tht I signed upe with GCSolutions and World Law.  Global Client Solutions handles your money and World Law is suppose to provide legal assistance.
    For the first year I paid a monthly customer legal fee of 276.5 0 another customer fee of 84.95 and a transaction fee for a total of $4,450.80 in addition I was paying extra each month to build up money so Wolrd Law could make a money buyout.  After 12 months the legal fee of $276.50 ends but the $9.45 and $84.95 continue to be charged each month.  Some months I paid $1,000 extra.  After going to court twice and being found guilty on the second account World Law Settled my first date of $8,000 fo 6,000 and court costs.  The second acount has not been settled and World Law will  not even talk to the bank until I have 12,000 dollars in my Global Client Solutions Account.  Per the contract I wrote World Law a letter stating I wanted to end the contract. 
    Another issue, they want your bank account so they can withdraw money each month…DO NOT DO IT.  I canceled my GreenDot Bank Account after six months with Global and was sending money orders.  To this date Global is still trying to pull out money from a bank accont closed over a year ago.  I was scheduled to go to court for the second bill, World Law is suppose to call you 7 to 10 days prior to going to court, they did not call me, even after I left messages on their Lawyer hotline and called customer reps who are a joke.  During this year and a half I went through 5 or 6 customer legal assistance handling my case.  When I called last the lady was being fed info to say to me as I could hear a man in the background telling her what to say.  Your monthly call…. yes they have to call you once a month.  But if they call you and you do not answer that counts as the one phone call.  I requested a copy of my file they have to include all communications with the bank and have not received anything.  Finally, my second account was for 29,000.  I called the Law firm who was representing my old bank and I worked out a 12,000 buyout…. yep, did it myself and the buyout will be complete in less than 24 months.  So, BEWARE people of these rip off artists.  Working out deals and payouts is not hard, use proper language, be positive and show that you want to take care of the issue as soon as possible.  Your creditors would rather settle out of court at a reduced amount rather than not getting anything.  If you are with Global and World Law Call your bank and tell them to put a Freeze on the monthly withdrawl….  Within days of stopping payment your phone will light up like a Christmas Tree.  Best of Luck and God Bless.

    Reply

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