19 Mar Another Debt Negotiation Company Tossed Out of Georgia
In these difficult economic times it is no surprise that a booming area of business involves the “debt negotiation” business. We have all heard the radio and TV ads of firms promising to stop credit phone calls, to reveal secret programs that the credit card industry does not want you to know and to settle your bills for pennies on the dollar.
My colleagues in the Bankruptcy Law Network take a somewhat cynical view of these promises. There are no “secret” programs and a reduction of credit card debt can often be accomplished on your own or with the help of a low cost or no-cost counseling agency.
Nevertheless, dozens of these debt negotiation companies exist and will continue to pitch their services to cash strapped debtors.
Georgia, where I live and practice has a state statute that regulates to some extent the activities of these debt settlement entities. The Georgia Debt Adjustment Act, which can be found at O.C.G.A. Title 18, Section 5 applies to these businesses. This law sets limits on fees charged by debt settlement companies, imposes insurance requirements and obligates these vendors to segregate money collected, provide audit information and to disburse collected monies within 30 days of receipt.
Recently the Georgia Governors’ Office of Consumer Affairs filed an action against a Texas based debt relief company called Debt Relief USA. As part of a consent order, Debt Relief USA agreed to reimburse its Georgia customers $527,205.55 plus pay $40,000 to the Governors’ Office of Consumer Affairs. Debt Relief USA also agreed to cease doing business in Georgia.
The moral of the story – before paying any entity a fee to negotiate your debt, do your homework. Find out of your state has a consumer protection agency and visit their web site to investigate your vendor. Pick up the phone and call the state regulators. And as always – if something sounds too good to be true, it probably is.
Jonathan Ginsberg, Esq.
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