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And Oh How They Fall: Advanced Fee Attorney Model Debt Settlement Companies

By on August 23, 2015

Yesterday I posted an update about how World Law, World Law Debt, World Law Group, or whoever they were at the moment; is being liquidated. You can read the details here.

The latest closure of the advanced fee debt settlement company by regulators, legal action, or the courts has to make some think the model is doomed to fail and based on the collective thousands of pages of public record, was never a good model for consumers.

In the past five or so years there were some big players in the Morgan Drexen – shuttered, World Law – Shuttered, and Legal Helpers Debt Resolution – shuttered. And remember back not so long ago when some inside the debt relief industry were fighting there was nothing wrong with the model?

From World Law court documents, “Oregon asserts that Orion operates under various “World Law” entities to target vulnerable consumers who are in financial trouble as a result, mostly, of credit card debt. Orion tells consumers that it is a law firm and that it will provide local licensed attorneys to resolve consumers’ unsecured credit card debts. In reality, Orion employs no local attorneys and charges consumers illegal upfront fees for substandard debt negotiation services. Orion also charges illegal upfront fees before any debts are settled.” – Source

From the Consumer Financial Protection Bureau about Morgan Drexen, “In 2013, we sued debt settlement company Morgan Drexen for collecting illegal “upfront fees” for debt settlement services and for running deceptive advertisements. We prevailed in our lawsuit: in April 2015, a federal court ruled against Morgan Drexen and found that the company misled the court and falsified evidence during the lawsuit. The court later ruled that Morgan Drexen must stop collecting money from its customers. Morgan Drexen went out of business in late June 2015 after filing for bankruptcy.” – Source

From attorney action against lawyers involved with Legal Helpers Debt Resolution, “Respondents placed more importance on their own success and financial gain than they did on their clients’ interests. The Panel heard no expressions of remorse for the harm their clients suffered. Additionally, in the opinion of this Panel, Respondents did not sufficiently contemplate the ethical problems that LHDR’s model and operations caused and ultimately did not acknowledge the gravity of these problems.” – Source

READ  Morgan Drexen Virginia Lawsuit Update

What does this string of company closures indicate to you?


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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.

2 Comments

  1. Carol

    July 2, 2016 at 2:45 pm

    Hi Steve. I communicated with you several times back in 2011 when I became aware that World Law Debt was engaged in deceptive practices. When I finally terminated my relationship with World Law Debt and requested a refund of the thousands of dollars they robbed from me. I entered into what I thought was a legitimate way to work with my creditors after a completely unavoidable financial crisis put me in a very vulnerable position. By the time I realized that they had not used any of my money to pay creditors, they told me the money was for upfront legal fees and not refundable. I found out that laws had been previously past to make this practice illegal. It didn’t matter, I never got a cent back, and my credit was so damaged that I am still trying to rebuild it. Is there any recourse for any of us who were scammed by World Law Debt and their aliases? And, whatever happened to Pacific Capital? Lastly, is documentation of what happened in any way beneficial to restoring credit? Thanks for still being a champion for justice. Carol V.

    • Steve Rhode

      July 5, 2016 at 2:52 pm

      Hi Carol,

      Justice. Is there such a thing?

      In a situation as you describe one of the fastest and least expensive ways out is bankruptcy. It is very easy to build credit after bankruptcy. See https://getoutofdebt.org/32410/how-to-easily-rebuild-your-credit-and-have-good-credit-again

      If you are ever able to recover money, it will be a small percentage of what you are out. These cases never seem to end well for anybody.

      I took a look at the case activity I covered over at https://getoutofdebt.org/97913/world-law-orion-processing-kiss-off-case-update and it looks like the court appointed receiver is trying to auction off some assets to recover some money. But this stuff is basic office crap and won’t generate much. Maybe the sale of the building will result in a bit more money. But the receiver says, “The Receiver has determined that the Mountain Ridge Property has equity available for the receivership estate but that the net value to the estate is eroding through ongoing payment of debt service on the mortgage encumbering the property and maintenance, repair and other preservation expenses associated with the Mountain Ridge Property”

      As far as some of the people in this case, “Defendant Derin Scott seeks an order releasing $100,000.00 in frozen funds to pay for legal defenses in this case for himself and his wife, Relief Defendant Shannon Scott. Defendant also seeks over $10,000.00 per month for his family’s living
      expenses. ”

      “The Receiver detailed its financial findings in a Report filed with the Court, which explained that over $60 million in fee income had been received by the Corporate Defendants and their affiliated entities from June 2008 through August 2015, but that the Receivership had only been able to recover a little over $7 million in funds.”

      I wish I had better news.

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