Debt Settlement – 15 Companies under Investigation in New York

More and more states are cracking down on unscrupulous Debt Settlement firms that charge consumers hefty fees before performing a service. ¬†Calling debt settlement ‚Äúa rogue industry‚ÄĚ that gives strapped consumers false hopes while socking them with high fees, New York State‚Äôs attorney general, Andrew Cuomo, has announced an investigation involving numerous companies in the field.

Cuomo has recently issued Subpoenas and launched investigations into 15 Debt Settlement companies. The complaints where initiated mainly because of consumer complaints that Cuomo has received from New York residents about these firms over the last several years.

Debt Settlement Companies InvestigatedThe following firms all received Subpoenas from Cuomo’s office:

1.  American Debt Foundation Inc.
2.  American Financial Service
3.  Consumer Debt Solutions
4.  Credit Answers L.L.C.
5.  Debt Remedy Solutions L.L.C.
6.  Debt Settlement America
7.  Debt Settlement USA
8.  Debtmerica Relief
9.  DMB Financial L.L.C.
10. Freedom Debt Relief
11. New Era Debt Solutions

12. New Horizons Debt Relief Inc.
13. Preferred Financial Services Inc.
14. U.S. Financial Management Inc. (operating as My Debt Negotiation)
15. Allegro Law.

Cuomo Sues Settlement CompaniesKeep in mind the Attorney Generals office has issued subpoena’s to these companies in an attempt to learn the fee structure, number of clients and whether or not these companies are providing the advertised benefits. ¬†At this point Mr. Cuomo has not filed suits against these companies. ¬†When the results of the investigation are determined, a decision to move forward with a lawsuit or not will then be made.

Today over 2,000 debt settlement companies operate in the United States, up from just a few dozen 10 years ago. ¬†Unfortunately most of the 2,000 companies do not help consumers at all, but rather siphon large amounts of fees upfront and leave consumers worse off than they were before. ¬†Make¬†sure to thoroughly research and investigate any company before signing a contract. You should also seek the advice of a qualified financial professional to help you to first determine the best financial strategy for your situation. ¬†Just because a debt settlement salesman can make something sound good, doesn’t mean it is the right strategy for you.

Have you had any experience with any of these Debt Settlement Companies?  If so, please share your thoughts HERE

About Damon Day

As a Debt Coach and a Financial Advocate, I have saved my clients Millions of Dollars by exposing the debt relief scams that other consumers fall victim to. I work directly for my clients to create custom debt relief strategies based on their own unique circumstances. Consumers who speak with me first, come out far ahead of those who don't, every single time. Guaranteed. +Damon Day

24 Responses to “Debt Settlement – 15 Companies under Investigation in New York”

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  1. R. MAK. (1 comments) says:

    Hi, thank you very much for such an informative article. These days we were publishing reviews about debt consolidation companies on our blog. This articles of yours really made us think again about some companies we thought were doing a very good job per see.. I hope you will keep an eye on those companies and call out the bad ones… We would soon do a post about the topic above and would like to link back to you…cheers

    .-= R. MAK.@student loan rate¬īs last blog ..Students Still Waiting For Loans =-.

  2. Damon Day (116 comments) says:

    Hello Rana,

    Thank you for the comment. I did see your post on your site and I appreciate the link. Yes, I do my best to keep my eye on what these debt settlement companies do and pass that information on to consumers. Since there are over 2,000 of these guys it makes it nearly impossible to keep up with them all. However, since the vast majority of them are doing things that are so blatantly against their clients best financial interests, it makes it very easy to identify the companies to stay away from.

    I would say based on my experience, consumers shouldn’t even consider 99% of them. I can count the ones that I would “refer my mother to” on 1 possibly 2 hands at most. So the deck is really stacked against uninformed consumers. I say “refer my mother” because that is my litmus test for my clients. If I wouldn’t refer my own mother to a company or program if she needed it, I won’t refer a client either.

    Thanks again for contributing and feel free to use my articles as a source in the future. I will be doing in depth reviews on many of the large debt settlement companies and posting them to my blog over the next few weeks.

    .-= Damon Day¬īs last blog ..Debt Settlement Nightmare for Phoenix Woman =-.

  3. Ali Romero (1 comments) says:

    Sent payments to those Allegro Law crooks for over a year, to consolidate two credit card debts. I pulled one of them and settled the debt and it is now off my credit report, the one they were to cover – sears credit card – i had sent them over $3,500 – debt was “to be settled for half of what was owed” – this account more than covered for that – when it finally hit me to get a feel for such clearance, i discovered these scam dogs were under receivership – due to fraudulent ways of conducting business. Took me hours to get a hold of Allegro Law’s office – as their web is off of the air, and they said they had like $300 on escrow and I need to continue sending money – with a total of three times the original credit card debt. I sent a certified letter to Allegro and the receivership individual that I was not sending any more money to a dead horse – and demanded my money back….nothing has been heard in the past 4-5 months out of nay of these two entities….they have scammed thousands of people and some of the “attorneys of the firm” are being sued due to not functioning in a correct manner…, lots of us are still hanging with these debts, some have been at court and no one to represent them…and taking the debt from square one…I refuse to give up on my money – I contacted them cause I could not afford the debt and this has taken me to owing it twice….anyone can help all of us recover our monies from these crooks at Allegro Law?

    • Damon Day (116 comments) says:

      Hello Ali,

      It is unfortunate that you and 15,000 other people found yourself victims in this Allegro Law Mess. Unfortunately I fear that it is only going to be the tip of the ice berg because a majority of settlement companies operate with a fee structure typical to the Allegro Model. With so many regulatory changes potentially happening by the end of 2010 and into 2011. There are going to be a lot of programs that end up getting shut down or filing for BK. The lesson for people currently considering signing up with a debt settlement program is simple. Do not sign up with a program that charges all of their fees before doing all of the work. Find a program that uses a pay as you go model and charges a fee based on how much they save you, not how much you owe.

      You may already be aware of it but you can go to allegrolawreceivership.com. (Update, That site is no longer online it seems) At that site you can find updates on the receivership process. Hopefully there will be some money left once the attorneys get done with it. They also, I believe are trying to work with creditors in an attempt to work out deals with creditors on behalf of Allegro Victims. So you may find some relief there.

      Have you attempted to negotiate with sears directly?

  4. Maria (2 comments) says:

    My sister just got scammed out of about $1200 from Debt Settlement. She is losing her mind being scammed so many times to get out of a debt from another scam that costed her $40,000 plus IRS penalties and interest. How can these companies keep getting away with these scams. They must be some sort of government regulation. Please keep me posted if and when there’s a class action lawsuit in the works. thanks.

  5. Mary (4 comments) says:

    Hello Damon, I just found your site, great work on the debt settlement findings! I was a client of Freedom Financial AKA Freedom Debt Relief. I am fighting with them for a refund, and know I may never see a penny of the $9,255.68 I paid them over a 10 month period. That was just there fees, I actually had $18,370.00 drafted. Let’s see Chase sued me but they are still claiming a success for the settlement, they settled a Capital One promising funds that could never have been paid in the time period they settled for. They would have had to ask for more money from us. They are absouletly lower than scum for what they have done to hard working Americans. Anyone reading this do not sign with a debt settlement company. If you think you are in bad shape now it is nothing compared to being scammed out of $9,255.68 and in worse shape than when you started with the settlement company. They will promise you the world and deliver nothing, they are so many other ways to settlement your financial crisis and Damon and Steve Rhode can direct your better and give you honest answers! Currently I am filing a Chapter 13, the pressures are leaving alittle bit everyday, and we are on our way to a financial makeover. I was overcome by optimism that Americans will soon be free of the debt settlement companies. Yes, they are the type of people that will scam another way, but they cannot do it like they were. I am so glad that Attorney General Cuomo is investigation Freedom Debt Relief, he was one of 28 organizations I sent a huge documentation packet of proof of what they did to us and my complaint. Damon look up the word prorater unless you know what it means (I had to look it up). Andrew Housser co ceo of FFN/FDR claims on January 23, 2009 through TASC that his company does not practice this or do this in response to the lawsuit in San Mateo, California. Then why do I have two detailed payment plans from 2 of there settlement employees. Anytime, you want to see my complaint and paperwork, just email me. Thanks for all your information!

    • Damon Day (116 comments) says:

      Hello Mary,

      Your situation is very unfortunate and it just irritates me to no end to hear stories like yours day in and day out, and then see these guys like Housser putting out press releases saying that their front loaded fee scam is so great for consumers.

      Luckily the FTC has finally banned that fee structure and I guess we can finally take a small bit of comfort knowing that most of these guys will be out of business very shortly. Unfortunately though, you cannot regulate moral character and they will likely just go into another industry and continue to rip people off in pursuit of the all mighty dollar.

      I appreciate you coming on to share your story with other consumers. If even one potential client reads your comment and decides not to enroll in Freedom Debt Relief because of it, it will be a good thing. If you haven’t read it yet, you might enjoy my latest post on Freedom Debt Relief.
      Damon Day recently posted..Freedom debt relief says upfront fees help consumers-I say Bullshit-What say youMy Profile (dofollow)

  6. Katie (2 comments) says:

    Be warned!
    Do not ever sign up with Preferred Financial Services out of Massachusetts. They mislead us from the beginning and now we are much worse off and being sued by our creditors.

    • Mary (4 comments) says:

      Katie, Take a deep breath as hard as it seems. I like you have been scammed by a settlement company and have ended up in a worse financial situation. We are in the processs of a Chapter 13 and starting to feel some relief. I am so sorry that you are going through this, but know that there is hope and you will get out of this situation and move on. On July 29th Vice President Biden and the Federal Trade Commission have put hard core rules on the settlement companies and they now have regulations they have to go by. I know that does not help you now, but it is sweet revenge as many of them will go out of business. Freedom Financial Network AKA Freedom Debt Relief scammed me out of $9,255.68 and I have been sued by Chase. Not fun, you are not alone. Do your research, check your Attorney General’s website for help, contact a bankruptcy attorney for a consultation. I promise there is hope and you will get through this!! Best of Luck to you and your family.

    • Damon Day (116 comments) says:

      Hello Katie,

      I am sorry to hear that. If you tell me a little about your situation I may be able to help you with some damage control and figure out the best moves from here. What these debt settlement companies do to people is so much more damaging than just the fees that they steal from consumers.
      Damon Day recently posted..Don’t Call a Debt Settlement Company for Financial Advice- Craigslist Exposes WhyMy Profile (dofollow)

      • Mary (4 comments) says:

        Damon,
        I appreciate your reply and for all the great information that you and Mr. Steve Rhode put out there for consumers. You are right if I stop one person from signing with FFN AKA FDR then I have success. My situation is unfortunate, but I think we are about to find out how many people are really in the same situation as I am. I do not blame FFN AKA FDR for my debt that I occured, but for misleading me into believing that I would pay them $1,837.00 a month and they would help fix the problems. I am on my way to financial recovery and a much wiser person than before. The emotional toll that it has taken on my family is starting to heal. When people find out that have been scammed out of money it is horrible, but to trust someone to help you and
        find out they have violated your trust is another ball game. Mr. Housser and Mr. Stroh have no moral character and there employees are about to find this out when these new regulations come into play. They have taken advantage and scammed hard working Americans. Keep providing information and I will keep reading! Thanks again!!

  7. Chapter 13 Lawyer (1 comments) says:

    Unfortunately, a lot of people have taken this distressed market as an opportunity to scam and cheat people of even more money. It is sad. Everybody should be helping out together till markets get back in shape.

  8. Jonathan (14 comments) says:

    It really doesn’t surprise me to hear that such a large number of companies are under investigation for misleading clients. My opinion is that debt settlement companies should be a last resort but the ease at which they can advetise means that they frequently present themselves as a first resort.

    • Damon Day (116 comments) says:

      Jonathan,

      You have nailed it on the head. Most of these companies charge all or a majority of their fees before actual services are performed.

      What most consumers don’t know is that usually more than 50% of the money they are paying is going to the sales outfits that are selling these rip off programs.

      So the entire thing is about massive advertising and slamming as many unfortunate consumers into their rip off programs as they can. They don’t have to worry to much about performing a successful service because by the time the consumer figures out that the sales pitch is nothing like reality, the company has long been paid most or all of its fees.

      Trying to get a refund from these guys is very difficult, and getting a full refund is almost impossible.

      I know of no other word for a front loaded fee debt settlement company other than a “scam.”

      They know perfectly well that most of their clients are not going to have a favorable outcome and they collect the fees in advance knowing this. How can it be anything else but a scam straight up.

      Luckily regulators have finally caught up to most of these people and new consumer protection laws on the books will help, but they will not eliminate the problem unfortunately, because you cannot regulate moral character.
      Damon Day recently posted..Dave makes Thousands Screwing Consumers- way to go Dave!My Profile (dofollow)

  9. kymath (1 comments) says:

    I really need some advise about Legacy Debt solutions that I am with. When I first got in contact with them, I did do some research and thought that I would be doing the right thing in my quest to become debt free. Yet, I hear that that might not be the case. Some of my creditors say that they do not work with debt settlement or debt consolidation companies, but Legacy tells me that they do. Hindsite, I should never have allowed myself to get so far in debt. Since I am, I need to know where to go from here in order not to have to file bankruptcy.

    • Damon Day (116 comments) says:

      Hello Kymath,

      Please tell me a little more about your situation and I would be happy to help you.

      How long have you been with Legacy Debt Solutions? What is the program that they put you on? Are they charging their fees on the front half of the program?

      If you tell me a little more about that I can tell you whether or not you need to get out of their program and do something different.

      As far as what the different solution may or may not be, I would need to know much more about your overall financial situation.

      The problem with asking a debt settlement sales person for advice on how best to get out of debt, is that they always tend to say “why debt settlement of course” for obvious reasons.

      If you would like a private phone consultation so we can go over your entire financial situation and goals moving forward, please use the consultation link at the top of my website and my assistant will set up a time for us to speak.

      We can then create a specific plan to best resolve your issues.

      But please first give me some information on Legacy and I will tell you if you should bail on that program.

      Here is an article I wrote about what they did to another client of mine.

      http://damonday.com/1017/legacy-debt-solutions-vs-credit-solutions/

      Please read that and let me know if you had a similar experience.
      Damon Day recently posted..Legal Helpers Debt Resolution Review ‚Äď Secret Business Plan ExposedMy Profile (dofollow)

  10. Virgil S (1 comments) says:

    Hey thank you for the very relevant posting, i ended up getting myself out of debt after almost getting involved with these unscrupulous people. Luckily it occurred to me is it the best way to get out of debt by going in even deeper?

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