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Debt relief companies punished after scamming customers

When people in Durham are facing large debts, it can be very tempting to look for an easy way to make the problem go away. While there are many legitimate companies that help consumers handle their debts, there are also some who advertise heavily yet provide little or no benefit to those who need financial assistance.

A recent court order has put a stop to the practices of 11 such companies. Some agencies help consumers by consolidating their debts into manageable monthly payments. However, others instruct customers to submit monthly payments to the debt settlement company rather than directly to the person’s creditors. The company then holds onto the funds while a settlement is negotiated with the creditor, often for less than the full amount owed.

An injunction has been issued against 11 debt settlement firms who took in money from their customers but then failed to make any payments to creditors. The customers now have to contend with credit scores that have plummeted and accounts that are in default. The companies are also facing charges alleging that they misled consumers in a number of ways. There were three individuals that ran the 11 various companies.

People who are looking for assistance with debt relief should make sure to thoroughly investigate any agency that they are considering letting handle their case. Many non-profit agencies offer credit counseling at no charge. People who have large amounts of debt may wish to consult with an experienced attorney.

Source: Consumer Affairs, “Court order shuts down 11 debt settlement companies,” Mark Huffman, May 24, 2017

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