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Cuomo targets debt settling companies
New York State Attorney General Andrew Cuomo
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KAI RYSSDAL: With recessions come companies that promise to help individuals get themselves out of financial trouble. For a fee of course. The debt settlement industry -- as it's known -- has grown from about 300 companies to a thousand in just the past couple of years. Those fees, and some other troubling practices, have caught attention of New York State Attorney General Andrew Cuomo. He's launched an investigation into 14 companies, calling debt settlement a rogue industry. From New York, Ashley Milne-Tyte reports.
Ashley Milne-Tyte: Cuomo says some firms have pressed clients to sell their blood plasma to pay off their debt and the firm's fees. Gail Cunningham of the National Foundation for Credit Counseling says there's not much to stop them.
Gail Cunningham: It's a wild, wild west out there when it comes to regulation.
She says many debt settlement companies aren't honest about what they can and can't achieve for the client. And they charge a lot up front.
Cunningham: You know, let's have a fee once a service has been provided and let's have that fee commensurate with the service.
Robby Birnbaum represents the Association of Settlement Companies, an industry trade group. He says most firms have perfectly reasonable fees.
Robby Birnbaum: And I'll tell you frankly, in the majority of cases these companies are getting dramatic results for these consumers.
Like clearing 20 to 50 percent of their original debt. Birnbaum says the attorney general should be looking at what he says are the real culprits: rapacious credit card companies.
In New York, I'm Ashley Milne-Tyte for Marketplace.
I entered in a debt consolidation agreement with Global Clients Solutions in Dec. 09. I have paid them $858.89 for three months. I have called them several times to obtain an update on debt consolidation of 37,000.00. I was told last week that I would have to wait bet 6 month to a year to start getting settlement proposals. My debt started at 36,000.00 but has gone up due to high interest rate and late payment fees, etc. I took matters into my own hands and just finished settling all debts for 40% of what I owed. Can I get my money back from Global Client Solutions? How do I go about getting $ back? Would your office assist in this problem which after all can go toward paying the card companies after I settled with all of them? Thank you.
How many times do you get india when you call your credit card company? Often they don't understand our credit system and how life can happen to anyone. It's not that easy to just call your credit card company and get results. Not to mention if you do get someone in the united states, they are getting paid some type of bonuns for collecting delinquent accounts and won't just offer up a settlement to every caller. Simply put there is a need for debt settlement companies, they have the clients interests in mind, not the banks, and they do all the dirty work for people who want to pay what they owe, but don't have time with work and family. Simply put the credit card company only wants you to call them or deal with their extended collection agency, with a pretty name of credit counseling.
Banks have huge debts, but they're getting a helping hand from the federal government. If you have overwhelming debt--perhaps from bad investments, or maybe a job loss, a medical crisis or just plain overspending--you're probably on your own. Check the website http://obamadebthelp2009.blogspot.com
to see if they can help. I am glad I did read it before I talk to my CC company and it helped - Jane Jim, California
