Lawsuits Filed Against Debt Collection Company & Debt Resolution Company

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Seattle Firm Suing Texas Debt-Resolution Company

Today's down economy and credit squeeze has more and more people looking for help in resolving their problems with debt.

The largest debt-resolution company in the country is called Credit Solutions, but many of its customers claim it has caused them credit problems. It promises to help the growing number of people who have problems with their credit. But now a Texas-based company is being sued by a Seattle firm, accused of doing more harm than good for thousands of consumers.

Now a class action lawsuit has been filed in Seattle against the company, Credit Solutions of America, since one of the alleged victims is from here. She wouldn't go on camera, but plenty of others would, including Misty Adams and Darlene Bradford.

"They promised after three years I'd be completely out of debt," Bradford said.

"They were going to lower my debt by about 50 percent," said Adams. "It sounded like a good deal."

Both had gotten deeply into credit card debt. But they said after going to Credit Solutions for help, they found themselves deeper in the red. And they aren't alone.

More than 1,000 complaints against Credit Solutions have been registered with the Better Business Bureau in the past three years, leading the B.B.B. to warn consumers that there are bad actors in the debt-resolution business.

"If they're asking you for money up front, (that's) a huge red flag. Typically you don't pay someone $500 that can look at your debt and help you get out of it," said Paula Fleming of the B.B.B.

Credit Solutions charges a fee of 15 percent of the debt amount. It promises to negotiate with the lenders so the client can pay less -- up to 60 percent less.

But Darlene Bradford said she paid Credit Solutions $1,000 in fees and got no relief from her debt.

Tyler Weaver is with the Seattle law firm filing a national class-action lawsuit against Credit Solutions, accusing the company of violating consumer protection laws. MORE


Lawsuit accuses collector of harassment over invalid debts

Minnesota Attorney General Lori Swanson Monday sued an Illinois debt-collection agency for attempting to collect invalid debts from Minnesotans.

"This debt collector crossed the line by pursuing debt people said they didn't owe and failing to verify that they did owe it," Swanson said. The office received more than 50 complaints about AFNI Inc., a collection agency in Bloomington, Ill., that's been in business for 70 years. Swanson said she's seeing an uptick in the number of debt-collection complaints as the economy falters. Indeed, complaints about collection agencies are on the rise nationwide: The Better Business Bureau reports that it received more than 18,000 complaints in 2007, up 26 percent compared to 2006. The agency's Minnesota and North Dakota branch saw 29 percent more complaints in 2007, for a total of 798.

The lawsuit, filed in Hennepin County District Court, alleges that in addition to not verifying debts, AFNI collectors would "badger Minnesota citizens into paying debts that they do not owe, improperly reported illegitimate debts to credit bureaus, and refused to take steps to remove the debts from Minnesota citizens' credit reports," violating state and federal collection laws.

AFNI, a member of the Edina-based collections industry trade group ACA International, said it had not seen the lawsuit and declined to comment.

Megan Simonson of Minneapolis had difficulty buying a home because of a blemished credit report due to a debt she did not owe, according to a sworn affidavit. A victim of identity theft, she tried countless times to resolve the matter with AFNI and failed. At one point she resigned herself to paying half of the debt in order to close on her home purchase, but changed her mind when the company told her payment would be an admission of guilt.

"In addition to having one AFNI agent lie to me and attempt to defraud me, AFNI simply would not act to address my concerns and resolve the problem with the false debt in time for me to close on my house," she stated.

The complaint also said some debts that AFNI attempted to collect were as much as a decade old. And proving that the debts weren't theirs fell on the shoulders of the consumers, not the agency, according to the suit. The term "zombie debt" has been coined for old debt that's hard to verify and won't go away. MORE


For more information of you rights under the Fair Debt Collections Practices Act see earlier blog:

Debt Collectors Gone Wild

How to deal with abusive Debt Collectors -Do you Know your Rights?

Appeals Court Rules Aggressive Debt Collector Violates Consumer Rights

For much more info on more lawsuits and your rights see:  Debt Collection Issues

Also visit Attorneys John Watts & Stan Herring's informative  Law Blog

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"many of its customers claim it has caused them credit problems"

Of course the debt settlement process will negatively affect a person’s credit. Isn't Credit Solutions telling their clients this? Is it in their contract?

Listen. Debt settlement is a bankruptcy avoidance strategy. It’s intended for people who have substantial credit card debt and for some reason, now can’t afford to pay their creditors on their current terms.

Debt settlement is intended for people who were falling behind on their bills anyway or were months late already heading for bankruptcy.

People that want debt help but are concerned about their credit score should not consider a debt settlement program. They should consider a legitimate credit counseling service or pay the creditors on their terms.

Now if you don’t like those options, than you will have to sacrifice your credit score. You can’t maintain a good credit score when you deviate from the creditor’s terms. It’s that simple.

If you have a mountain of debt and now have ridiculously high interest rates from missing a payment due date or something, you may want to contact your creditors and tell them you cannot afford a 28% interest rate.

Unfortunately, in most cases, most credit card companies will not budge and tell you tough luck – but sometimes they will so you have to at least try.

Also, for those people who claim that reducing interest rates on accounts or settling debt can be done by anyone, quite frankly, doesn’t know what they are talking about.

That’s misinformation is coming from either an uninformed person or bank propaganda that found its way through the Internet.

The fact is, many legitimate debt settlement companies that have everyday working relationships with creditors and that understand the negotiation processes, have a hard time. And they have experience at settling debts everyday!

Lastly, if you have some income but are heading for bankruptcy due to the extreme debt load, than consider a debt settlement service that’s facilitated by attorneys.

What do you know about Credit One Debt Solutions or Consumer & Business Debt Counseling services, Inc. 2101 W. State Road 434 Ste. #201, Longwood, Florida 327779

I don't know of that particular company off hand but I have yet to meet a debt repair company -that provided a real a solution -without costing you more money. Most companies will charge high fees. If a legit non-profit, they wouldn't ask for fees up front.


You can and should always check with the BBB, do a search on the web for complaints and in this case, check with the FL Attorney General's office and/or website at and brush up on a few of their actions against these types of companies.. Here's a couple of links -that can give you some insight. Know what you are getting into.

Great advice Ms. Richardson. Many individuals can negotiate on their own behalf, and there are countless scams around. The best advice for anyone is just to thoroughly research -anyone- he or she is doing business with. Thanks for the great writeup!

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