Lawsuit Highlights the Issues with Debt Settlement Services

 Posted on August 27, 2018 in Bankruptcy Law

Recently, the Consumer Federal Protection Bureau (CFPB) initiated a lawsuit against the nation’s largest debt settlement services provider, Freedom Debt Relief. According to the claims, this formerly well-regarded company was not telling the truth as far as their fees and the reach of their capabilities. Unfortunately, this is not the first, nor the last debt settlement company openly deceiving clients to earn their trust and boost their profits. These are a few of the top complains that surfacing from the litigation.

Debt Settlement Promises Are Misleading

Clients complain that Freedom Debt Relief led them to believe that all of their debts were negotiable and would settle within months. Unfortunately, debt settlement services do not have the capabilities of stopping collection attempts. Therefore, many clients continued experiencing harassing phone calls, emails, and postal collection attempts, many of which went further into collections or resulted in judgments. Filing for bankruptcy is the only method that places an automatic stay on all collection attempts; meaning, foreclosure, repossession, and harassment all must come to an abrupt stop.

Clients Experienced Deceptive Practices

Many customers claim Freedom Debt Relief verbally agreed that they would negotiate all of their debts; yet, sources show the company had prior knowledge that several companies already refused to consult with their company, regardless of the client. In the debt settlement options, creditors examine each offer on a case-by-case basis and choose whether or not to negotiate. Bankruptcy does not give any creditor the authority to refuse, except on disallowable debts. If your debt is not allowed in the bankruptcy, your attorney will let you know before beginning the filing process.

Freedom Debt Relief Lied About Fees

All debt settlement companies receive payment based on the portion of any amount they convince a creditor to forgive or reduce. One of the significant complaints emerging from the lawsuit was customers realized the company assessed additional fees, including when a creditor voluntarily gave up collection attempts without Freedom’s involvement. Debt settlement services nickel and dime their payments, making it impossible for clients to know how much they should expect to pay the company. Attorney Chance M. McGhee lets each of his clients know how much they can expect to spend, leaving little room for surprises.

Get the Reliable Results You Need

A significant number of bankruptcy filers began by trying debt settlement first. Unfortunately, the complaints are consistent, regardless of their chosen company: the process takes too long and ultimately costs too much. If you decide to file for Chapter 7 or Chapter 13 bankruptcy, you will see results in months, not years. A Schertz, TX bankruptcy attorney will give you honest representation with no hidden surprises. Law Offices of Chance M. McGhee has decades of experience assisting clients through the bankruptcy process and earning them the financial freedom their families needed. Let us earn your trust today. Call us at 210-342-3400 to find out how bankruptcy can benefit your family in a free no-obligation consultation.

Source:

https://www.consumerfinance.gov/about-us/newsroom/cfpb-sues-freedom-debt-relief-misleading-consumers-about-its-debt-settlement-services/