Just a few hours ago I posted Colonial Law Group and My Enrollment Center Sent a Paralegal to Meet With Me and asked if anyone had any documents, please forward them.
Well I now hold in my hand a consumer agreement for Colonial Law Group that appears to answer some questions. The only one that is unclear is what is the date of the document.
The client agreement says Colonial Law Group is located at One Oxford Center, 301 Grant Street, Suite 4300, Pittsburgh, PA 15219. The State of Pennsylvania lists a registered company, Colonial Law Group, LLC which was registered to do business on May 15, 2015.
The address listed is a virtual office space. – Source
The attorneys listed as partners include Vann Spray, Stacey Robinson, Andrew Van Loon, Brandon Chabner, G. Anthony Yuthas, Sheron Barton, Leo Rammuno, Karen Ganto, Tiffany Coleman, JD Hass, Thomas Humphrey, John Shulte, John Farrell, Katie Douglas, Lori Leigh, Cameron Hoorfar, Mark Anderson, Grey Powell, David Knapp, Michael Terry, Maultz Van Niekerk, Michael Cox, Haley Simmoneu, Michelle Watson, Alberto De Diego, Hal Browder, Bryan Fears, and David Hester.
The next page is a letter of engagement which seems focused on unsecured debt.
The agreement sent to me appears to offer the “Client’s unsustainable debt burden” by restructuring their debt. The “program requires accumulated savings to effectuate potential settlements.” I’d lump that approach into a law firm based debt settlement strategy.
The agreement offers a “Litigation Defense Service” in certain situations.
But the agreement goes on to say Colonial Law Group (CLG) will not provide “Representation of Client in any matter before a court, including foreclosure proceedings or in any arbitration hearing, except as expressly set forth in this Agreement.”
CLG will subcontract out work to third parties but says CLG attorneys will “supervise all such negotiations and customer support.” How will the attorneys get any work done if they are supervising third party staff?
Then the Agreement goes on to describe what services will be offered to Client’s when they are sued.
The services will be billed and appear to contain a possible worrisome advance fee for debt settlement services. The Agreement says the consumer will pay an initial retainer of $900 over eight months. In addition an ongoing monthly legal fee of $79 will be charged. On top of that the company will charge a fifteen percent fee of the total debt for services rendered by Colonial Client Services. This fee appears to be front loaded and the fifteen percent “service cost shall be paid by Client in equal consecutive monthly payments over the first [ ] months of the program.”
Even if the consumer settles their own debt or finishes the program early, the Agreement says they will “remain responsible for payment of the full Service Cost.”
Even though a limited litigation program is provided for, the Agreement says, “In the event a litigated matter proceeds to trial, Client shall also be required to pay the costs associated with CLG’s trial preparation, which the parties hereby agree in advance shall be set at $350 per trial.”
The Client Agreement offers a CLG performance standard. The standard says “CLG will endeavor to achieve a target debt reduction of at least thirty-five percent (35%) of the debtor’s balance at the time the Agreement was entered. If the 65% settlement is not achievable then there is a big list of why CLG will or won’t have to refund any money to the Client.
Refunds are only available for Client’s which have completed the program and not terminated. But here is the real kicker, it looks like the 35% reduction is not a hard target. “If for any reason, Client is unwilling or is unable to accept a proposed settlement on any account with a settlement debt reduction of thirty-five percent (35%) or more [emphasis added] than the debt’s balance at the time the Agreement was entered, this Limited Guarantee shall be null and void, and have no force or effect.”
The fees paid by the consumer in this agreement will be non-refundable.
The consumer is urged to not talk to their creditors by engaging in debt resolution discussions.
On this page are some very important statements:
- “there is no guarantee that any or all of Client’s debts will be resolved.”
- “Enrollment in CLG’s debt negotiation program may not prevent creditor or collection agency phone calls.”
- “no payments of any kind, including any monthly minimum payments, will be made to Client’s creditors on the accounts.”
The next page goes on to include the additional warnings:
- “Client may continue to incur late fees and penalties on the enrolled accounts.”
- “Client’s participation in the program will likely have an adverse effect on Client’s credit score.”
The next page includes a puzzling statement and warning about other possible solutions. It says, “Declaring bankruptcy may discharge or allow a court imposed repayment plan for the majority of Client’s debts; however it will be a permanent record on a Client’s credit report for up to 10 years.” But the delinquency of debts included in the CLG plan will be permanently reported for up to 7.5 years on the credit report. Additionally, there is not enough information to let consumers know the overwhelming majority of bankruptcy cases filed completely discharge debt in about 90 days for around a total cost of $2,000. Let’s assume the consumer was enrolling $40,000 of debt. Their cost for this program would be:
$6,000 service fee
$4,642 in additional fees.
But the comparison is not given the Client signing the agreement that they can pay $2,000 now to discharge their debt in about three months or go with the nearly five year plan for $11,541 that does not have a disclosed performance record.
The Agreement binds the Client to arbitration.
Skipping ahead a couple of pages CLG describes themselves in similar terms as the now shuttered Morgan Drexen did. They claim to offer both debt negotiation, restructuring and bankruptcy services.
The bankruptcy disclosure given talks about the 2005 bankruptcy law changes but does not provide the Client with facts about what bankruptcy would mean for them in their situation or cost.
Skipping ahead a few more pages here is the payment schedule in the Agreement but it has the Service Cost blacked out.
Then there is a page that looks like a face-to-face meeting was conducted. In the past this strategy was used to get around the Telemarketing Sales Rule to avoid the limitation on charging advance fees.
Then is the client agreement to have Global Client Solutions collect the money from the consumer. Seems we’ve seen this sort of thing many times before.
If you want to read the entire client agreement provided to me, click here.
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