Quick Answer: Connecticut issued a cease and desist order against Practical Debt Relief on November 9, 2015, for charging Connecticut debtors $2,400 in fees that exceeded the state’s maximum allowable rates. Connecticut consistently takes aggressive enforcement action against debt relief companies that don’t provide full refunds and exceptional customer service when complaints arise.
I don’t know why debt relief companies don’t learn the lesson that Connecticut is a tough SOB state when it comes to debt relief issues. If a company allows someone to complain to the State rather than just giving a full refund and exceptional customer service, they get slapped by Connecticut. This happens over and over again.
The latest company to learn that lesson is Practical Debt Relief. According to the State, on November 9, 2015 they published a cease and desist order, order to make restitution, notice of intent to impose a civil penalty against Practical Debt Relief.
The State alleges:
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Respondent is a corporation organized under the laws of the State of Florida, with an office located at 5210 S. University Drive, Suite 104, Davie, Florida.
On or about May 28, 2014, two Connecticut debtors executed a “Practical Debt Relief, Inc. Negotiation Program Client Agreement” (“Agreement”) authorizing Respondent to assist the Connecticut debtors in “reducing and/or resolving the debt owed to uncollateralized creditor(s)”.
In connection with the Agreement, the Connecticut debtors paid a total of $2,400 to Respondent.
The $2,400 charged by Respondent and paid by the Connecticut debtors to Respondent under the Agreement is an amount in excess of amounts that debt negotiators may charge for services related to unsecured debt pursuant to the Schedule of Maximum Fees established by the Commissioner on or about October 1, 2009 (“Schedule of Maximum Fees”).
Specifically, the Schedule of Maximum Fees provides, in pertinent part, that “[a] debt negotiator of unsecured debt may collect total aggregate fees including the initial fee and service fees, not to exceed ten percent (10%) of the amount by which the consumer’s debt is reduced as part of each settlement as agreed to in the debt negotiation service contract as each settlement is achieved”.
Between at least August 4, 2010 and November 17, 2011, at least three other Connecticut debtors retained Respondent for debt negotiation services related to secured or unsecured debt and those debtors paid a total of at least $3,806.03 to Respondent.
At no time relevant hereto has Respondent been licensed to engage or offer to engage in debt negotiation in this state, nor did Respondent qualify for an exemption from such licensure.
On or about July 28, 2014, the Commissioner received a complaint filed by the Connecticut debtors referred to in paragraph 2 concerning Respondent’s failure to perform or successfully complete the debt negotiation services specified in the Agreement.
On or about August 5, 2014, Respondent refunded $2,400 to the Connecticut debtors referred to in paragraph 2. However, upon the information and belief, the Connecticut debtors referred to in paragraph 6 have not been refunded. – Source
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Before You Sign Anything: Run any debt relief contract through the free Contract Decoder to spot hidden fees and unfair terms. Check the company’s complaint history with the Scam-O-Meter.
Compare Your Real Options: Most debt relief companies won’t tell you about all your options — especially the ones they can’t profit from. Credit counseling has a 21-27% completion rate. Settlement resolves about 1% of enrolled debts fully. Bankruptcy has a 95% discharge rate — and protects your retirement. Take the Find Your Path quiz for a recommendation based on your actual numbers.
