Arkansas consumers who are considering debt relief services should be aware of the proliferation of scams within that industry. An example is found in a recent judgment imposed by the Federal Trade Commission against one company. The operator of that fraudulent debt relief scheme will now have to pay $7.9 million in restitution to consumers bilked by the scam. While participation in the company’s plan did not lead to the discharge of debts, those affected may receive some form of compensation as a result of the recent federal court action.
The company operated under the name DebtPro 123, and promised consumers debt settlement and credit repair services. In reality, however, consumers received little or nothing in return for their payments to the debt relief firm. DebtPro 124 collected fees up front for services that had not yet been provided, which is one of the biggest red flags that consumers should be alert for when dealing with a debt relief company.
Monthly payments were supposed to go toward paying down the client’s debt. However, in many cases, more than half of those monthly payment amounts were being used to pay fees to the company. Clients were told to cease communications with their creditors and to allow DebtPro 123 to handle all negotiations and correspondence. It appears that the company postponed contacting creditors until consumers were faced with the threat of a lawsuit. Many DebtPro 123 clients actually saw their debts increase during the time they used the company’s services, which left them in a worse financial position than when they started.
As this case illustrates, a wide range of scams can be found within the debt relief industry. Arkansas residents who are searching for debt relief options may be better served by filing for personal bankruptcy, rather than attempting debt settlement. Bankruptcy can lead to a relatively quick discharge of debts, leaving individuals well-positioned to begin rebuilding financial stability.
Source: consumerist.com, “Operator Of Bogus Debt-Relief Scheme Must Return $7.9M To Harmed Consumers“, Ashlee Kieler, Oct. 5, 2015