Why Seattle-Tacoma Residents Should Be Careful with Debt-Relief Companies

Posted By David Yando || 8-Mar-2011

The Washington State Attorney General has forced a debt-relief company to refund more than $740,000 to nearly 600 consumers. “Freedom Debt Relief,” a California company, was accused by the Attorney General’s office of breaking consumer protection laws.

“Freedom Debt Relief” told the financially strapped Washington state residents they would get a payment plan and negotiated settlements for their debts.

However, the company paid the settlement as a result of these allegations:

  • Overcharging customers
  • Taking money from consumers before the legally permitted time
  • Misrepresentation of information

Such debt-relief fees cannot exceed 15 percent of the consumer’s aggregated debt.

“We’re paying special attention to operations that take advantage of people who, due to this tough economy, are already struggling to put food on the table and keep the lights on,” said Attorney General Rob McKenna in a press release.

This is another example of misleading claims the public faces when searching for debt solutions. This company told their clients to stop paying their bills and pay the debt adjustment company, a common practice in the industry.

Then, after the company has taken its fees and, as often times happens, the client’s creditors will not agree to settle the debts, the clients are much worse off in the end.

“Failing to inform customers that their credit may be ruined and taking illegal fees – when those individuals are making a good-faith effort to settle their debts — are practices that we aim to stop,” said the Attorney General.

A published report indicates this is not “Freedom Debt Relief’s” first skirmish with the law. The Seattle P-I reported the company was forced to quit selling its dubious programs to Washingtonians in 2009 following a federal class-action lawsuit.

Despite denying the Attorney General’s allegations, “Freedom Debt Relief” is making $742,613 in refunds to at least 570 state residents. The company is also paying $70,000 to reimburse the Attorney General’s office for its legal expenses.

The settlement outlines the requirements with which the company must comply before marketing its services in Washington again.

It is very important to be careful with companies that represent their services as debt-relief. Many do not deliver what they promise. Such practices are common and only hurt consumers’ chances to solve their debt problems.

Here are tips on how to rebuild your credit.

Many Seattle-Tacoma residents find debt payment plans do not solve their problems. Their solution: Chapter 7 bankruptcy.

Categories: Bankruptcy, Debt Relief

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