MADISON, Wis. (Legal Newsline) - Wisconsin Attorney General J.B. Van Hollen announced on Tuesday that his office has filed five separate actions against debt adjustment service companies for allegedly charging upfront fees and failing to register for required licenses.
The defendants are: Fidelity Debt Solutions LLC; Legal Debt Cure LLC; CCDN LLC, doing business as Everest Debt Solutions; Reliance Financial Inc., formerly known as Frontier Trading; and Loan Workout Consultants also known as Affordable Mortgage Consultants.
Van Hollen's office filed the actions on behalf of the state's Department of Financial Institutions Division of Banking.
Adjustment service companies must be licensed with the DFI and are prohibited from charging significant upfront fees for their services. The companies named in the actions allegedly charged significant upfront fees and failed to register with the DFI despite repeated orders to comply. The actions seek enforcement of DFI's orders, compliance with the state's consumer laws, forfeitures and restitution.
According to consumer complaints filed with the DFI, all of the companies said they could reduce the debt of a consumer by having the consumer put monthly payments into a trust account. The companies then allegedly said they could negotiate with the creditors to forgive as much as 60 percent of the debt and that they would use the funds in the trust account to pay the creditors. The companies also allegedly told the consumers to stop paying their creditors.
In many instances, the upfront fees allegedly absorbed most of the trust money leaving insufficient funds to pay the creditors, Van Hollen says. In addition, because the consumers were advised to stop paying their creditors, the creditors often filed lawsuits against the consumers, he says.