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Madigan sues debt settlement companies

By Nick Rees | Feb 10, 2010


CHICAGO (Legal Newsline) - Lawsuits have been filed by Illinois Attorney General Lisa Madigan against four debt settlement companies that allegedly charge excessive fees and engage in deceptive marketing practices.

In addition to the lawsuits, which charge the four companies with doing little to improve the financial standings of its customers, Madigan has proposed legislation to crack down on abusive practices in the debt settlement industry.

"These companies are unfairly luring financially strapped consumers with misleading claims that they can effectively eliminate consumers' debt," Madigan said.

"The reality is that, after enrolling in a debt settlement program, consumers too often find themselves in even worse financial straits. It's time to clean up this industry so that people struggling to pay off their debts aren't being sold a false bill of goods."

The lawsuits name the Dallas-based Debt Consultants of America Inc., and owner Robert J. Creel, Long Beach, Calif.-based Endebt Solutions LLC, doing business as DebtOne Financial, American Debt Arbitration of Clearwater, Fla., Glenn P. Stewart, its president and director, and Phoenix-based Nationwide Asset Services Inc., and William Anderson, its president and secretary, and Gary K. Brown, its secretary and director; as well as the Austin and Lago Vista, Texas-based Clear Your Debt LLC, Swiftrock Financial Inc., Orion Processing LLC, and managing members Derin Scott and Shannon Scott.

Madigan's complaints allege that the defendants are in violation of the Illinois Consumer Fraud and Deceptive Business practices Act through misrepresentation of their services provided and the subsequent impact on consumers' credit by those services.

Each of Madigan's complaint asks the court for a permanent injunction to bar the defendants from further engaging in debt settlement in Illinois. The complaints also ask for restitution for aggrieved consumers, civil penalties of $50,000 for violating the Consumer Fraud Act and an additional $50,000 penalty for each violation committed with the intent to defraud. A $10,000 penalty for each violation committed against a person 65 years or older is also sought.

Legislation was introduced last month by Madigan to end abusive and unfair practices used by the debt settlement industry.

The proposed HB 4781 bill seeks to prohibit debt settlement firms from charging upfront fees, basing final compensation on the amount saved from settling a debt and from advising consumers to stop paying their creditors.

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