Yesterday a suit was filed in Washington State by Meghan Fitzgerald against Legal Helpers Debt Resolution, LLC, for violations of the Washington Debt Settlement Act, RCW 18.28, et seq. and the Washington Consumer Protection Act, RCW 19.86, et seq.
The lawsuit states:
In approximately August of 2010, Ms. Fitzgerald received a solicitation from LHDR offering to assist Ms. Fitzgerald with her debt.
In September of 2010, Ms. Fitzgerald signed a contract online with LHDR for the purpose of assisting Ms. Fitzgerald in resolving a $33,281.56 debt Ms. Fitzgerald owed to Bank of America.
Ms. Fitzgerald took LHDR’s advice to discontinue payments to Bank of America and instead make payments to LHDR.
At some time unknown to Ms. Fitzgerald, Bank of America sold the $33,281.56 debt to FIA Card Services, N.A.
After Ms. Fitzgerald signed the LHDR contract online, she never received a copy of the contract. Ms. Fitzgerald did not receive a copy of the contract until September 30, 2011, when she requested it over the telephone.
RCW 18.28.110 (2) requires that LHDR deliver a completed copy of the contract between the debt adjuster and a debtor immediately after the debtor executes the contract.
The LHDR contract received by Ms. Fitzgerald on September 30, 2011, contains no signature of any LHDR representative.
The LHDR contract signed by Ms. Fitzgerald fails to notify Ms. Fitzgerald that she is entitled to a copy of the contract at the time she signs it, as required by RCW 18.100(7)(b).
The LHDR contract fails to contain a notice, in ten-point boldface type or larger, directly above the space reserved in the contract for the signature of the buyer, that buyer should not sign the contract without reading the entire document, or, if any spaces are left blank, as required by RCW 18.100(7)(a).
The LHDR contract required Ms. Fitzgerald to pay an initial “flat fee retainer” of $500.00.
The LHDR contract requires Ms. Fitzgerald to pay $7,592.23 in total fees. The fees charged by LHDR pursuant to the contract are as follows:
The total fees charged by LHDR, $7,952.23, comprise over twenty-two percent (22%) of the $33,281.56 debt listed on the contract.
RCW 18.28.080(1) provides that in contracting to provide debt adjusting services, the total fee may not exceed fifteen (15%) of the debt listed by the debtor on the contract.
To ensure that payments by debtors are actually used to attempt to adjust debts, RCW 18.28.110 (4) provides that debt adjusters must distribute to creditors, at least once each forty days after receipt of payment, at least eight-five percent of each payment received from the debtor.
Although Ms. Fitzgerald has paid LHRD $6,284.21 since October of 2010, LHRD has failed to distribute any money to the creditor.
Ms. Fitzgerald never received a receipt from LHRD following the more than ten (10) withdrawals LHRD took from her bank account for payment.
RCW 18.28.110 (3) mandates that a debt adjuster deliver a receipt to a debtor for each payment within five days after receipt of such payment, unless the payment was made by check or money order.
LHRD failed to provide to Ms. Fitzgerald, at least once every month, an accounting of the total amount received from or on behalf of Ms. Fitzgerald, the total amount paid to each creditor, the total amount which any creditor has agreed to accept as payment in full on any debt owed the creditor by the debtor, the amount of charges deducted, and any amount held in trust.
Although the contract states that Ms. Fitzgerald had through 2014 to discharge the debt using LHRD’s services, representatives from LHRD told Ms. Fitzgerald in September of 2011 that unless she agreed to pay off the debt, at an escalated rate that was unaffordable for Ms. Fitzgerald, the creditor would sue her.
The pay scale in the contract demonstrates that Ms. Fitzgerald would settle with the creditor for $13,312.62. However, in September of 2011, Ms. Fitzgerald approached LHDR to inform LHDR that she had $10,000 and hoped that LHDR could get the debt settled for $10,000, or an amount close to that figure.
In response, LHRD insisted that Ms. Fitzgerald could only settle the debt by paying a total of $18,334.00 – $11,359.00 that month, and $2,325.00 each month for the next three months. The settlement amount of $18,334.00 did not include the $6,284.21 Ms. Fitzgerald had already paid to LHRD in fees.
Ms. Fitzgerald immediately advised LHRD that she could not afford to pay $18,334.00 in the next four (4) months, because all of her extra money ($7,952.23) was going to pay LHRD’s fees. In response, LHRD representatives screamed at and were verbally abusive towards Ms. Fitzgerald. LHRD representatives then told Ms. Fitzgerald that she would get sued by the creditor if she didn’t come up with $10,000 and $2,300/month for the next three months.
Ms. Fitzgerald’s telephone interactions with LHDR representatives caused her emotional distress, anxiety, loss of sleep, and missed work. – Source
This case was filed by:
KAREN S. LINDHOLDT, PLLC
Attorney at Law
1309 W. Dean Avenue, Suite 100
Spokane, WA 99201
Telephone: 509-744-1100
Fax: 509-744-1101
Email: karenlindholdt@gmail.com
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My wife and I can attest 1st handed to LHDR practices, it took less than a year for us to see thru their immoral practices and are in recovery process as of now and will post back once we get resolution.
My wife and I can attest 1st handed to LHDR practices, it took less than a year for us to see thru their immoral practices and are in recovery process as of now and will post back once we get resolution.
So, basically, she’d pay $7592 to have someone pick up the phone every month and say “She doesn’t have enough money to settle yet” and then have someone eventually say “She has this much, can you settle the debt with this amount?”.
She could have done the same thing herself for free.
What amazes me about people who sign up for debt negotiation is why they think their creditors are going to sit back and be ok with waiting 3 years to get paid. Would YOU be ok if I owed you 30 grand then told you I’ll pay you in 4 years…..half what I owe you? I think not.
“At some time unknown to Ms. Fitzgerald, Bank of America sold the $33,281.56 debt to FIA Card Services, N.A.”
Correct me if I’m wrong, but isn’t FIA Card Services another name for Bank of America rather than a separate company?
As previously mentioned. It will be cases like this that will start to get the attention of the company heads. Let’s not forget that while many people are waiting for the FTC to take action there are thousands of consumers that will begin to get representation by legal council to file individual cases and I have a fishy suspicion they will all begin to prevail when you look at taking the consumer’s funds and settle little or no debt.
Consumers will begin to wake up and the companies better look out. Debt settlement is NOT a solution for everyone, proper qualifications are critical to be able to deliver a quality service. This is not a one size fits all solution.
Having helped people in this industry for over 11 years it still turns my stomach to read how people can continue to rip consumers off.
Alex Viecco
Alex
Are you saying for the last 11 years you have been registered in WA and following the fee provisions.. if yes,,, when ( both- New Era and DTS – forgot when you changed your company name) if there is a problem answering I can always call
Mailing Address: Department of Financial Institutions Consumer Services Division PO Box 41200 Olympia, WA 98504-1200 Phone Numbers: Main Telephone Line: (360) 902-8703 Toll Free: (877) RING DFI (746-4334) TDD: (360) 664-8126 Email: dcs@dfi.wa.gov
Tacoma
“We have not operated in all States from the beginning. We do not accept clients from Washington.”
can you please respond to the below
so if a company needs to send payments to creditors every 40 days… debt settlement is essentially not possible in WA