Debt settlers still on McGraw's radar
CHARLESTON, W.Va. (Legal Newsline) - West Virginia Attorney General Darrell McGraw announced Wednesday that more consumers will have their debts wiped out because of his office.
McGraw reached settlements with Consumer Credit Counseling of America, Debt Relief USA and Acushield Financial Services, resulting in $374,520.12 for 141 West Virginians. Last week, he reached similar agreements with five companies who canceled nearly $1 million in debt for 492 consumers.
Wednesday's settlement was different in that consumers who called CCCA were enrolled in a debt settlement service by two law firms, Hess Kennedy of Florida and Richard Brennan of Maryland. Consumers did not speak directly with the lawyers.
"Debt settlement companies take advantage of the goodwill of consumers who truly want to pay off their debts by promising an 'alternative to bankruptcy,'" McGraw said.
"Instead of advising consumers about all their options, as an attorney is ethically obligated to do, these companies steer consumers into a very costly option, a debt settlement plan. Although some accounts are occasionally settled, most consumers end up quitting the program within the first two years after being subjected to constant collection calls, being sued by the credit card banks, and seeing no positive benefits from the program.
"When consumers cancel these debt settlement plans, their request for refunds of the thousands of dollars in fees is routinely denied."
McGraw said Charleston-area consumers who thought they were calling local company Consumer Credit Counseling Services were actually calling CCCA, listed in the phone book as "Consumer Credit Counseling, Charleston, 347-8828."
McGraw said he has been investigating the debt relief industry in 2005 after receiving numerous complaints upset with large fees.
McGraw, running for re-election in November against Republican Charleston attorney Dan Greear, said debt settlement companies charge unlawful fees, provide credit repair services without a license and engage in unauthorized practice of law.
"My staff has found that almost every consumer who signed up for debt settlement services would have been much better off filing for bankruptcy in the first place," McGraw said.
"Had they done so, their credit card debts would have been completely discharged or drastically reduced for a fraction of the cost and without any tax consequences."
From Legal Newsline: Reach John O'Brien by e-mail at firstname.lastname@example.org.