Five groups operating in Wisconsin violated state licensing; charged large upfront fees
FARMINGTON HILLS, Mich., June 20, 2012 /PRNewswire-USNewswire/ -- Recently, the state of Wisconsin filed actions against five debt settlement companies operating in the state. The actions stated, in part, that the companies were not licensed in Wisconsin and each charged large upfront fees, a violation of the Wisconsin Department of Financial Institutions, Division of Banking, requirements.
"We applaud the State of Wisconsin for taking steps to protect consumers," said Rick Bialobrzeski, GreenPath Debt Solutions director of government affairs and communications. "Unfortunately, there are predators in the marketplace that prey on people who are experiencing financial hardship. These companies make lots of telemarketing calls, buy 'leads' from marketing companies, and make attractive promises to entice consumers to sign up for their programs."
In part, the Wisconsin Department of Justice said, "The company stated it would…negotiate with the creditors to forgive up to 60 percent of the consumer's debt, and use the accumulated funds in the trust account to pay the creditors. Unfortunately, in many instances the upfront fees absorbed most of the trust money such that there were insufficient funds to pay the creditors."
The department highlighted a couple who paid more than $6,900 without receiving any adjustment services. After the company took fees out of the account, only $2,300 remained for the creditors.
TIPS ON HOW TO GET HELP
The United States Federal Trade Commission (FTC) publishes a guide (www.ftc.gov/bcp/edu/pubs/consumer/credit/cre26.shtm) to help people recognize the difference between a legitimate credit counseling organization and a predatory debt settlement company. The FTC says that "debt settlement differs greatly from credit counseling. It can be very risky, and have a long term negative impact on your credit report and, in turn, your ability to get credit."
When looking at an advertisement or website, it can be difficult to distinguish between a debt settlement company and a legitimate credit counseling organization.
GreenPath Debt Solutions, headquartered in Michigan, with more than 60 other branch offices across the United States, (including Wisconsin offices in Madison and Milwaukee), has provided some guidelines in helping individuals choose a legitimate credit counseling organization.
- Be wary of companies that claim they can arrange for your debt to be paid off for a much lower amount --- 30 to 70 percent of the balance you owe.
- Beware of any company that contacts you through telemarketing.
- Legitimate companies should help you develop a budget and action plan free of charge.
- You should not be required to pay more than $25 to $75 in upfront fees to set up a debt repayment program.
- Work with a company that has been in business for a long time, with an established track record of service.
- Do some research on companies you are considering. What is their rating with the Better Business Bureau? Do they have a physical address? How long have they been in business?
- If you are experiencing financial difficulties, contact a non-profit credit counseling organization. A good place to start is with the National Foundation for Credit Counseling (NFCC) at 800-388-2227 or www.nfcc.org.
Learn more about debt, credit, and finances by logging on to GreenPath Debt Solutions' website at www.greenpath.org and bookmark social media at www.facebook.com/greenpathdebt and www.twitter.com/greenpathdebt.
About GreenPath Debt Solutions
GreenPath Debt Solutions is a nationwide, non-profit financial organization that assists consumers with credit card debt, housing debt and bankruptcy concerns. Their customized services and attainable solutions have been helping people achieve their financial goals since 1961. Headquartered in Farmington Hills, Michigan, GreenPath operates more than 60 branch offices in Michigan, New York, New Hampshire, Colorado, Florida, Texas, Vermont, Illinois, Indiana, Wisconsin, Arizona and Wyoming. GreenPath also delivers licensed services throughout the United States over the Internet and telephone. GreenPath is a member of the National Foundation for Credit Counseling (NFCC) and is accredited by the Council on Accreditation (COA). For more information, visit www.greenpath.org.
SOURCE GreenPath Debt Solutions