FTC: Consolidation Companies Could Increase Your Debt

By Ginger Allen, CBS 11 News

GRAND PRAIRIE (CBSDFW.COM) – The Federal Trade Commission says some North Texas debt relief companies could leave you in more debt than ever.

“What attracted us to them was we could arrange a settlement,” says Andrew White of Grand Prairie.

White was facing health and financial troubles when he turned to Debt Consultants of America in Dallas.

“I heard it on the radio.” Radio, Television and Internet ads for debt companies promise “secret programs” and ways to “save you thousands” but after White enrolled and paid for eight months, he says he got “nothing, absolutely nothing.” White says his $14,000 debt went up to $16,000.

“They then told me, ’Mr. White we never made a payment and all the 8 payments you made to us have been used for your initial upfront fee…and now we’ll charge you for a settlement free.’ And I wanted to know what did you settle?”

White spoke at the Federal Trade Commission’s news conference. The FTC announced that, over the past decade, debt relief companies have broken promises to hundreds of customers. Some of them claim to eliminate up to 60-percent of credit card debt in just 18-months.

“We determined at the FTC that we could prevent this through the new rules and the legal actions we announced here today,” says Charles Harwood, Deputy Director of the FTC Bureau of Consumer Protection.

The FTC unveiled new rules to stop debt relief companies form collecting advanced frees from people like White. The government also announced it is suing two North Texas companies for deceptive claims. Corey Butcher is part owner in both of the companies.

“As far as savings…I don’t know how much more they want us to substantiate. We’ve shown them between all entities… over 30-thousand settlements,” says Butcher.

Butcher has owned Financial Freedom Processing and Debt Consultants of America since 2006. He says he’s settled more than $150 Million in consumer debt for up to 10,000 customers.  A sign on the company walls says “Customers are #1.” Butcher thinks he’s unfairly taking the fall for an industry with some bad apples. In fact, he says he’s spent his career trying to bring attention to bad debt companies.

“I always challenged and called for state regulation that this industry had to be regulated.”

Butcher says Andrew White…and many of the other customers now complaining…never completed their financial programs with his company.

White and the FTC are now heading to court to argue that, if they had completed those programs, they would be in deeper debt.

For more information on the Federal Trade Commission program, including how to choose a debt settlement company or how to settle your debt, click here.

  • http://thebaddebtconsolidation.info/try-debt-consolidation-to-tackle-your-high-interest-rate-debt-credit-loan-blog/ Try Debt Consolidation to Tackle Your High-Interest-Rate Debt – Credit Loan (blog) | Bad Debt Consolidation

    […] If your FICO scores are low, and the scores of a growing number of American consumers, you may need to turn to loans debt consolidation to eliminate your debt at high interest rates. This is because with low credit scores, you will be excluded from best credit cards, those that come with introductory interest rate of 0 percent for a limited number of months. Many consumer debt credit card balances high pass their high-interest credit cards with 0 percent interest. This gives them a specified period, usually six to nine months, to pay their credit card debts up without worrying about 16 to 20 per cent interest rates which often come with standard credit cards. But if your scores are low, credit card companies will not send you these offers 0-percent-interest rate. Declining credit scores A recent study of FICO, the largest provider of credit ratings in the country, made news recently. It turns out that a growing number of U.S. consumers with credit scores – 25 percent of them – have a FICO score under 600. For a reference point, any score below 620 is generally considered terrible. In fact, most conventional lenders and credit card companies today to book the lowest rates for consumers with FICO credit scores above 750. What can you do if your results are under that? You can not rely on credit card offers up to knock off your debt. Instead, you may have to turn to loans to consolidate debt. How Debt Consolidation Works With a debt consolidation loan debt, you will work with a private company that takes your monthly credit card debts and combines them into one loan. You can then make one payment a month to repay this debt. As you make your payment on time, will reduce your debt and collection agencies will stop calling. However, like most financial tools, in collaboration with consolidators debt is far from perfect. Advantages and Disadvantages debt consolidation companies often charge high fees for their services. They also attach high interest rates for loans they leave. However, if you have low FICO scores, you can have some other options. A consolidation loan debt, while far from perfect, will at least give you a way to gain some control over your debt. And while you pay your consolidation loan debt off, you can work on improving your credit score. That means paying all your monthly bills on time every month, without exception, and debt relief from your credit card. Follow these steps and you’ll soon expand your financial options. Popularity: 1% [?] If you liked this post, make sure you subscribe to my RSS feed! Debt consolidation companies – Google News by Ben Brown Related news: FTC: Consolidation Companies Could Increase Your Debt Could some local debt relief companies leave you in more debt? Read more on CBS 11 Dallas – Fort Worth […]

  • http://jwfinancialcoaching.wordpress.com/2011/02/09/how-debt-consolidation-can-become-a-real-con/ How Debt Consolidation can become a real Con | JW's Financial Coaching

    […] all over the place on cable TV. However, they are all over the news in a negative way and the FTC is shutting them down by the hundreds each and every day. The concept is that they take your money and try to settle outstanding debts. The bad news is that […]

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