Knowledgeable Tacoma Debt Negotiation Attorney Warns about Debt-Relief Companies
Information from your Tacoma debt negotiation attorney: 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. It is important to hire a respected and experienced Tacoma Debt Negotiation Lawyer.
“Debt consolidation” means taking out a single loan to pay off several debts at one. Although this is a form of “borrowing from Peter to pay Paul,” it can yield a net benefit to the debtor when the terms of the new loan are more favorable than the terms of the old debts.
Nevertheless, the devil is in the details, or so it is said. Either you will benefit from a particular debt consolidation arrangement (after accounting for transaction costs) or you won’t. Only a close and brutally realistic look at the terms of the deal can tell you which is the case.
Debt negotiation is often selected as an alternative to debt consolidation. When it works, it is because you or your representative convinced your creditors to settle your debt on more favorable terms than before. Why would a creditor agree to this? Certainly not out of the altruism or charity – more practical considerations prevail.
Lowering the total amount of the debt can decrease the odds of debtor default, allowing the creditor to obtain a recovery that exceeds the amount that might be expected in Chapter 7 bankruptcy. Another option, lengthening the repayment period, can improve the debtor’s immediate cash flow situation while allowing the creditor to make more money in the long run.
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.
Contact a trained Tacoma debt negotiation attorney from Washington Fresh Start today, to discuss your situation and take a look at your options. We are here to help you.