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Fraudulent debt consolidation services: Who’s affected?

Did you hire a credit repair company, debt consolidation company or debt settlement company? Did the company make unkept promises or charge you before performing services?

In a world where credit debt is at an all-time high for Americans, many consumers look to debt consolidation to manage their mounting debts.

Debt consolidation companies promise to reduce your debt by allowing you to make one monthly payment while only paying a portion of your debt. Debt settlement companies offer to settle your debts for “pennies on the dollar.” Credit repair companies help consumers dispute inaccuracies on their credit reports.

However, not all debt consolidation companies are equal. Some of these organizations may overstate their services in the hopes of getting business. These companies claim to allow you to make monthly payments while creditors continue lawsuits and other collection activities. Some credit repair companies may take advantage of consumers already reeling from identity theft or who are struggling financially and looking to improve their credit.

Even though some of these actions are illegal, some credit repair companies, debt consolidation companies and debt settlement companies may still operate in deceptive ways and take advantage of consumers.

You may have a legal claim if you hired a credit repair agency, debt consolidation company or debt settlement company that did the following:

• Promised to perform services that they could not
• Made promises to you verbally that conflicted with the contract or actions taken by them
• Told you that they could change inaccurate information on your credit report to improve your score
• Charged you for services not rendered
• Charged you before performing services
• Did not give you a written contract when you hired them

If you were taken advantage of by a deceptive debt consolidation company, you may have a legal claim under the Credit Repair Organizations Act. A qualified lawyer can help you take action against unethical credit repair organizations and can help you seek compensation for financial or emotional damages.

About the Credit Repair Organizations Act

The Credit Repair Organizations Act is a federal law that protects consumers from exploitation by credit repair organizations.

When the companies operate legally under the Credit Repair Organizations Act, credit repair organizations can help consumers dispute inaccuracies on their credit reports. However, they are only allowed to provide services that a consumer could perform themselves.

For example, consumers are legally allowed to communicate directly with the three credit reporting agencies — Experian, Equifax and TransUnion — to dispute inaccuracies on their credit reports. However, some individuals may find this process to be confusing, overwhelming or time-consuming. In these instances, they may find it easier to hire a credit repair organization to dispute credit inaccuracies for them.

When a credit repair organization is hired, they are required under the Credit Repair Organizations Act to clearly disclose that they cannot perform services that the client cannot complete themselves. This regulation ensures that credit repair organizations cannot mislead consumers into thinking that hiring them will achieve impossible tasks related to credit reporting.

For example, credit repair organizations cannot advertise they can change correct information on a credit report. In some instances, consumers with low credit may wish that they could change accurate information on their credit reports if they have a low credit score. However, this is not possible. You may have a legal claim if a debt consolidation or credit repair company made false promises to you about what action it could take on your behalf.

The Credit Repair Organizations Act further protects consumers by prohibiting credit repair organizations from charging consumers before they perform services. Legally, a credit repair organization can bill monthly after services have been rendered or can bill per item corrected on a credit report.

To ensure that billing is done legally, the Credit Repair Organizations Act requires credit repair organizations to create written contracts with their clients. If you contracted with a credit repair organization but did not receive a written contract, even if they billed you at the correct time, you may have a legal claim.

The costs of debt consolidation fraud

In most cases, consumers who hire debt consolidation or debt settlement companies are already in distress. Perhaps they have had a low credit rating or credit score for a long time and are looking for a way out of financial despair.

Some unethical credit repair organizations may take advantage of consumers’ desperation and vulnerable positions. They may charge consumers for services they cannot render and had no intention of rendering. If this occurs, these consumers will be further financially injured.

If a credit repair organization is particularly fraudulent, they may use your credit information unethically and may expose you to further identity theft. Identity theft can take years to repair, as can a low credit score.

Although recovery from debt consolidation fraud can take years, reaching out to a qualified attorney can be the first step to effectively protect your finances and credit. You may be able to file a Credit Repair Organizations Act lawsuit and may be able to receive compensation for your injuries

Join a debt consolidation company lawsuit investigation

Reaching out to a qualified attorney can be the first step to effectively protecting your finances and credit if you have been harmed by an unethical credit repair organization. You may be able to file a Credit Repair Organizations Act lawsuit and may be able to receive compensation for your injuries.

If you hired a credit repair organization that made unkept promises or charged you before performing services, you may have a claim under the Credit Repair Organizations Act.

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