About Me
Craig D. Robins, Esq. New York Bankruptcy Attorney, Longisland bankruptcy attorney

“ Craig D. Robins, Esq., has been a practicing Long Island bankruptcy attorney for over twenty-four years ”

Craig D. Robins, Esq.

Debt Negotiation

New Debt Relief Company Rules Announced by Federal Trade Commission

Posted on Friday (July 30, 2010) at 11:51 pm to Consumer Advice
Debt Negotiation

New Debt Relief Company Rules Announced by Federal Trade CommissionWritten by Craig D. Robins, Esq.

So many consumers have complained about debt settlement companies that the federal government has finally taken some action.

Yesterday, the Federal Trade Commission announced a new restriction on debt settlement companies which is designed to address the growing nationwide problem of so-called debt relief companies making outlandish promises of success, but ultimately failing to do anything.

Up-Front Fees Charged by Debt Settlement Companies to be Prohibited

The new rules, which will take effect in the fall, will prevent debt settlement companies from charging any up-front fees before they settle or reduce a customer’s credit card debt.

I have reported previously that I regularly meet with clients who were promised the moon by debt settlement companies; yet these companies ripped them off after charging large up-front fees, failing to achieve settlements, and leaving the consumers in a worse position than they were to begin with. I ultimately end up filing a bankruptcy proceeding for many of these clients. See: Debt-Settlement Firms Misled Consumers According to FTC .

There Has Been Rampant Abuse by Debt Settlement Companies Across the Country

According to an article in today’s New York Times, attorneys general in more than 20 states have brought enforcement actions against debt-relief companies in the past six years. The FTC has also received one of the highest amount of complaints for debt relief companies than any other type of business. The number of consumer complaints has doubled in the past two years.

Unfortunately, the new rules will not protect everyone, and some loopholes leave many consumers open to abuse. The new rules only cover agreements with debt settlement companies made over the phone. They do not cover agreements made on line or through face-to-face meetings.

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Debt-Settlement Firms Misled Consumers According to FTC

Posted on Sunday (May 9, 2010) at 11:30 pm to Consumer Advice
Debt Negotiation

Debt-Settlement Companies are misleading consumersWritten by Craig D. Robins, Esq.
 
 
It’s hard to believe the number of radio ads and TV commercials hawking debt settlement services. Many of them falsely create the impression that the debt settlement services are part of a federal program.
 
Now the Government Accountability Office and the Federal Trade Commission have concluded that the great majority of debt settlement firms have misled consumers. The report was issued last week and it was extremely critical of the debt settlement trade.
 
The government reports indicated that many of these firms made false and misleading claims that they were affiliated with federal stimulus programs. They also exaggerated their ability to obtain settlements.
 
Debt Settlement Companies Are Becoming a National Problem
 
In the past five years, the number of debt settlement companies across the country has ballooned to over a thousand.  I’ve written extensively about the problems with debt settlement companies during the past year.
 
See:  Debt Settlement Industry Criticized by New York Times , in which the New York Times stated, The common complaint is that debt settlement companies are more interested in helping themselves earn fees than aiding their beleaguered clients.” 
 
 
The GAO study also concluded that debt settlement companies lied about their success rates. Apparently, many companies falsely represented that their success rates were 85 to 100 percent. However, the FTC concluded that the rate is less than 10 percent.
 
The report also pointed out how debt relief companies rip off consumers by charging hefty up-front fees before they perform any services.
 
Consumers Who Hire Debt Settlement Companies Often End Up Filing for Bankruptcy
 
As a Long Island bankruptcy attorney, I regularly see the fall-out when consumers are taken advantage of by debt settlement companies.  They come to me when their debt settlement plan fails, which is inevitably after they’ve paid significant funds to the debt settlement company without accomplishing any results.
 
However, they could have saved a great deal of money had they considered bankruptcy in the first place.
 
There is a Major Distinction Between Debt Negotiation and Debt Settlement
 
The services offered by debt settlement companies are very different from debt negotiation services offered by certain law firm such as my own.  With debt settlement companies, the consumer makes monthly payments to the company, and the company first applies these payments to their own fees before any settlement is actually made.
 
Debt settlement companies will often sign up consumers who they know, or should have known, would not be able to complete the program.  What’s more, the companies keep the fees even when services are not provided!
 
Debt negotiation offered by attorneys, however, is much different and involves negotiating settlements with the creditors.  The client typically does not pay any advance fees, other than an initial retainer.
 
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Process Server Going to Jail for Defrauding Consumers in Credit Card Collection Cases

Posted on Sunday (January 24, 2010) at 6:00 pm to Creditors Engaging in Abusive Bankruptcy Practices
Current Events
Debt Negotiation

New York process server admits to defrauding consumers with sewer service on credit card lawsuitsWritten by Craig D. Robins, Esq.
 
Owner of Long Island Process Serving Company Admits Ripping Off Consumers
 
Last April I posted an article about a Long Island process serving company that had been charged with engaging in “sewer service.”  Long Island Process Serving Company Owner Arrested Today for “Sewer Service” .
 
Last week the owner of that company, William Singler, pleaded guilty to fraud in Nassau County Supreme Court.  He admitted that his company failed to properly served thousands of consumers on Long Island and across New York with collection law suits, and then lied about it with false affidavits of service.
 
As a result of his actions, many thousands of New York consumers were denied their due process rights, and only learned that they had been sued when their bank accounts were restrained or their wages garnished.
 
William Singler was the owner of the legal service process serving company, American Legal Process, that had been located on Long Island, in Lynbrook, New York.
 
Process Server Claimed He Traveled Over 20,000 Miles an Hour!
 
The New York State Attorney General, Andrew Cuomo, revealed various aspects of the fraudulent scheme which included documents saying that one process server personally served lawsuit papers to someone in Brooklyn at 8:19 a.m. one morning, only to serve a second lawsuit 400 miles away, just one minute later.
 
That would require traveling over 20,000 miles an hour, and New York highways currently don’t accommodate such speeds.
 
According to prosecutors, American Legal Process employees routinely made only a cursory attempt to locate debtors, then gave up and submitted false affidavits of service, claiming they had served the debtors with the lawsuit documents.
 
You can click here to read a copy of the actual complaint alleging fraud against New York process service company .
 
Pending New York Lawsuit Seeks to Dismiss 100,000 Credit Card Collection Lawsuit Judgments
 
Attorney General Cuomo is still proceeding with a civil suit to dismiss about 100,000 lawsuits that contain affidavits of service prepared by William Singer’s company, American Legal Process.

The Attorney General accused 35 law firms and two debt collection companies of failing to ensure that servers were following the rules after hiring American Legal Process to serve summonses and complaints. See my post: Bill Collectors Slapped with Class Action Suit .

Jail Time Expected for Process Server Who Admitted to Scheming to Defraud Consumers
 
William Singler is expected to face some jail time for his fraudulent and illegal conduct.  He pleaded guilty to a single count of a Class E felony of scheming to defraud, which is punishable by a year in jail.  He is expected to sentenced on March 24, 2010.
 
In my opinion, a sentence of only a year in jail is hardly just punishment for someone who has defrauded a hundred thousand consumers, many of whom faced great difficulty when they were surprised by frozen bank accounts and garnished wages.
 
When Singler appeared before Nassau County Supreme Court Justice Alan L. Honorof, he admitted that he had signed phony affidavits of service, swearing that court papers had been served on defendants in debt collection suits even though he knew many of his employees had broken the law.
 
Many New York Consumers Have Grounds for Contesting Credit Card Judgments and Law Suits
 
Even though many thousands of credit card collection lawsuits were started improperly, the fact remains that in most cases, the underlying debt is not disputed.  Nevertheless, many consumers who were improperly served now have extra leverage to negotiate a low settlement.
 
Our debt settlement practice has assisted many consumers with resolving such outstanding credit card debts for very beneficial amounts.  We have also helped other consumers totally eliminate their credit card bills with bankruptcy.
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Bill Collectors Slapped with Class Action Suit

Posted on Sunday (January 3, 2010) at 2:00 am to Current Events
Debt Negotiation

Class action suit alleges debt collectors and collection law firms engaged in dirty, deceitful and fraudulent conductWritten by Craig D. Robins, Esq.
 
 
Some Well-Known Collection Law Firms May Have to Make Significant Payments to the Debtors They Have Sued For Having Engaged in Dirty and Dishonest Conduct
 
 
 
Victims of debt collectors who cheat their way to getting judgments may be getting their due.
 
As reported in the New York Times last week, a class action lawsuit was just filed in U.S. District Court in Manhattan.  The suit alleges that a network of bill collectors engaged in the deceitful act of “sewer service.”  
 
This is when a debt collector fails to serve the legal lawsuit documents and then files a false affidavit claiming the notice has been properly served. When the debtor doesn’t show up in court or file an answer to the collection summons and complaint, the collection law firm then obtains a default judgment.
 
Usually the victim does not learn about the judgment until he or she is surprised when their bank account is frozen. The judgments can also ruin a person’s credit report.
 
The New York Attorney General Began Investigating Sewer Service Last Year
 
I  wrote several posts about sewer service last year, which led to several investigations by New York’s Attorney General.  See Attorney General Investigating Process Servers for Taking Illegal Shortcuts.
 
The difficulties with the economy has put new scrutiny on the scheme as more and more people are being sued by debt collection firms.
 
In April, Attorney General Andrew Cuomo actually arrested the owner of a Long Island process-serving company, American Legal Process, for engaging in the practice. Long Island Process Serving Company Owner Arrested Today for Sewer Service.  In addition, he closed down several debt collection firms the following month:  Debt Collectors Shut Down by Attorney General .
 
The AG’s official investigation suggested that on hundreds of occasions, process servers claimed to be in several places at once, often over distances impossible to cover in a day. The New York Attorney General’s office is seeking to vacate more than 100,000 court judgments statewide obtained by debt collection law firms that used American Legal Process Company as their process server, and the Attorney General has expanded its inquiry into other firms as well.
 
Class Action Suit Encompasses Many Defendants Involved in the Collection Law Suit Process
 
The class-action lawsuit is pursuing the entire debt collection chain, starting with the debt-buying companies, the collection law firm they hired to collect the debt, and the process-serving firm used to serve debtors.
 
The suit names five debt-buying firms with variations of the names L-Credit and LR Credit. All are subsidiaries of Leucadia National, a $6 billion publicly traded holding company.
 
Mel S. Harris & Associates, the collection law firm named in the suit, is one that I have dealt with for years as they have a very high volume debt collection practice.
 
In my Long Island debt settlement and bankruptcy law firm, we regularly represent people who have complained that they were never served with lawsuit papers before learning about judgments against them.  In almost all cases, however, the clients acknowledged that they owed the debt.
 
We are usually able to negotiate a very beneficial settlement or eliminate the debt entirely through bankruptcy.
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Can Credit Card Companies Trust the Collection Firms They Hire?

Posted on Wednesday (November 18, 2009) at 9:00 am to Current Events
Debt Negotiation

Another credit card debt collection law firm gets in troubleWritten by Craig D. Robins, Esq.
 
Law Firm of Bill Collectors Dissolves Amid Law Suits Alleging that the Collection Firm Engaged in Fraud
 
I previously wrote about debt collector law firms in New York that had gotten in trouble with the law.  Debt Collectors Shut Down by Attorney General .
 
Now it is coming to light that a large regional collection firm in Georgia crashed and burned amid allegations that the firm failed to file collection law suits on behalf of their clients and also used funds for those suits to pay the firm’s own expenses.
 
The firm, Trauner, Cohen & Thomas, located in Sandy Springs, Georgia, dissolved after operating for more than 30 years. 
 
What led to the firm’s demise?  Several of the firm’s clients, who are banks and credit card companies, sued the firm, alleging various gross improprieties.
 
NCO Financial Systems, (a company I regularly deal with on behalf of my Long Island bankruptcy clients as they purchase massive amounts of delinquent debt), brought suit against the Trauner collection firm alleging that it gave the firm more than $1.3 million to reimburse the firm for filing fees and other expenses of collection suit litigation relating to more than 15,000 lawsuits the firm was to handle on NCO’s behalf.  Instead, the collection firm used the funds for its own operating expenses and inflated it reimbursement requests according to the pleadings.
 
Midland Credit Management brought another suit on similar grounds, alleging that they were defrauded $1.7 million.  A third suit alleges that the Trauner collection law firm is affiliated with a collection company, National Asset Recovery Inc., and that this company and the law firm defaulted on $1.7 million in loans.  There are even more similar law suits filed by Zenith Acquisition Corp. and Northstar Capital Acquisition.
 
One wonders if the financial pressures that many of these debt collection firms are suffering from encourages them to take shortcuts and violate consumer rights.  Congress recently issued a scathing report about the illicit practices of bill collectors:  Credit Card Debt Collectors Ripped in Federal Report .
 
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Five Scenarios Where Chapter 7 Bankruptcy Is Not the Best Solution to Debt Problems

Posted on Thursday (August 13, 2009) at 7:30 am to Chapter 13 Bankruptcy
Chapter 7 Bankruptcy
Debt Negotiation

Five Scenarios Where Chapter 7 Bankruptcy Is Not the Best Solution to Debt ProblemsWritten by Craig D. Robins, pills Esq.
 
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Although a bankruptcy filing is often the best solution to an unmanageable debt problem, patient some consumers should not to avail themselves of Chapter 7 bankruptcy relief. 
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Here are five types of situations where Chapter 7 bankruptcy may not be a realistic option:
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Too Many Unprotected Assets.  When filing for bankruptcy, ampoule you can keep and protect certain assets.  Some consumers have a significant amount of non-exempt assets that could be forfeited to a bankruptcy trustee.   See:  Bankruptcy Exemptions in New York .
 
Too Much Income.  In order to be eligible to file for Chapter 7 bankruptcy, a consumer must pass the means test.  Having a family income that is very high can preclude Chapter 7 eligibility.  See:  The Means Test is Often the Key to a Successful Chapter 7 Bankruptcy Case .
 
Transferring Assets to Family Members.  If you give away a valuable asset to a family member, then under certain circumstances the bankruptcy trustee can pursue the relative to try to get the value of the asset back.  See:  Why Consumer Debtors Can’t Transfer Assets Like a House or Car Before Filing Bankruptcy on Long Island .
 
Most Debt is Non-dischargeable.  Some debts cannot be eliminated in bankruptcy.  They include most income taxes, student loans, and matrimonial obligations.  A chapter 7 filing will not solve these types of debt problems.  See Student Loans and Bankruptcy   and  Matrimonial Fundamentals Under the New Bankruptcy Laws .
 
Recent Payments Were Made to Family Members.  If you borrowed money from family members and paid them back just prior to filing, you should not file for bankruptcy for a period of time.  Such payments are known as preferential payments, and if made in the one-year period prior to filing, can be set aside.
 
Even if Chapter 7 is not a possible solution under one of these scenarios, there are still other ways to manage debt.  Some alternatives include Chapter 13 bankruptcy and negotiating settlements with creditors.  Meeting with an experienced Long Island bankruptcy attorney will help you ascertain whether a bankruptcy filing is for you.
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Now May be the Time to Settle Debts with Your Credit Card Company

Posted on Monday (June 22, 2009) at 11:45 pm to Consumer Advice
Debt Negotiation

Now May be the Time to Settle Debts with Your Credit Card CompanyWritten by Craig D. Robins, Esq. and Dean Weber, Esq.

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Credit card debts can often be substantially reduced with Debt Negotiation

 

When you have debt problems, sometimes filing bankruptcy is the best solution.  But sometimes it isn’t.  When bankruptcy isn’t a perfect fit, debt negotiation may be.  This involves negotiating settlements with the creditors who are typically credit card companies and banks.

 

As the sheer number of people defaulting on their credit cards continues to increase, rising to unprecedented levels, credit card companies are doing something that they have historically scorned: settling credit card accounts for substantially less than what is owed.

 

With unemployment topping 9 percent and more, this approach by credit card companies has increased drastically. Credit card companies have even gone so far as to authorize front-line employees with the power to cut good deals.  We’ve been noticing this in our debt negotiation practice as we’ve been achieving some incredibly good settlements lately.

 

According to the Federal Reserve, 6.5% of credit card debt was at least 30 days past due in the first quarter – the highest percentage since the Fed began tracking the number in 1991.

 

What does this all mean for the average consumer who owes tons of money on their credit cards?  Well, it means that now may be a very good time — perhaps the BEST time — to settle their debts with the credit card companies. 

 

When considering debt negotiation, we believe that it is very important to retain an experienced debt negotiation attorney – one who is experienced enough to negotiate the best possible settlement.  There are many debt settlement companies out there who are not acting in the best interests of the consumer.  On several occasions I’ve written posts about this debt settlement companies engaging in false and deceptive practices (for example, please see Debt Settlement Industry Criticized by New York Times ). 

 

As experienced Long Island bankruptcy attorneys dealing with credit card companies on a daily basis, we know that creditors would rather have a piece of something now than absolutely nothing down the road.  

 

This is exactly why now may be the best time to consider your options, such as scheduling a free consultation with an experienced bankruptcy and debt negotiation attorney to discuss your best options for forging a new, debt-free future.

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Debt Settlement Industry Criticized by New York Times

Posted on Monday (June 15, 2009) at 12:15 am to Consumer Advice
Current Events
Debt Negotiation

remedy state regulators, members of Congress and state legislators — and the New York State Attorney General, Andrew Cuomo” src=”http://longislandbankruptcyblog.com/wp-content/uploads/2009/06/debt-mark-stephen.jpg” alt=”Debt settlement companies are being investigated by Federal Trade Commission, state regulators, members of Congress and state legislators — and the New York State Attorney General, Andrew Cuomo” width=”270″ />Written by Craig D. Robins, Esq.
 
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Times Article Highlights Problems With Debt Settlement Companies
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The New York Times, in an article published on June 10, 2009, drew attention to the problems with debt settlement companies, observing that the debt settlement industry is in the cross hairs of the Federal Trade Commission, state regulators, members of Congress and state legislators.
 
The article stated that many consumer advocates loathe the way the debt settlement companies solicit consumers.  According to The Times, the common complaint is that “debt settlement companies are more interested in helping themselves earn fees than aiding their beleaguered clients.” 
 
“Their ads promise the clients will get out of debt but, critics say, the reality is that they often become even more enmeshed.”
 
The Times quoted one debt settlement company spokesman who conceded that “there are a lot of bad apples in this industry.”
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New York Is Investigating the Debt Settlement Industry
 
The article was timely because New York State Attorney General Andrew Cuomo recently subpoenaed many debt settlement companies as part of a wide-ranging investigation.  I wrote about this last month:  New York Commences Nationwide Investigation Into Debt Settlement Industry — Many Offers to Eliminate Credit Card Debt are False and Misleading.
 
There is a Major Distinction Between Debt Negotiation and Debt Settlement
 
The services offered by debt settlement companies are very different from debt negotiation services offered by certain law firm such as my own.  With debt settlement companies, the consumer makes monthly payments to the company, and the company first applies these payments to their own fees before any settlement is actually made.
 
Debt settlement companies will often sign up consumers who they know, or should have known, would not be able to complete the program.  What’s more, the companies keep the fees even when services are not provided!
 
Debt negotiation offered by attorneys, however, is much different and involves negotiating settlements with the creditors.  The client typically does not pay any advance fees, other than an initial retainer.
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Consumers Using Debt Settlement Services Often Get Into Worse Financial Shape
 
In my Long Island bankruptcy practice, I cannot tell you how often we get clients who complain to us that they hired a debt settlement company, only to get into deeper financial difficulty after the company neglected to follow through on their promises of settling debts.  Debt settlement companies are unregulated and their are numerous horror stories of these companies steeling escrowed funds and going out of business.
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Debt Collectors Shut Down by Attorney General

Posted on Thursday (May 28, 2009) at 3:10 pm to Consumer Advice
Current Events
Debt Negotiation

Andrew Cuomo is actively trying to clean up those companies that use illegal methods to collect debts, one month after he began going after deceptive debt settlement companiesWritten by Craig D. Robins, Esq.
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Andrew Cuomo is actively trying to clean up those companies that use illegal methods to collect debts, one month after he began going after deceptive debt settlement companies
 
Yesterday, New York Attorney General Andrew Cuomo obtained a court order closing two bill collecting companies.  In addition, he subpoenaed 20 others as part of the New York state’s investigation of the debt-collection business.
 
Last month I wrote about Cuomo’s investigation into egregious activities perpetrated by the process service industry, which is integrally related to the collection industry.  See Attorney General Investigating Process Servers for Taking Illegal Shortcuts  and Long Island Process Serving Company Owner Arrested Today for “Sewer Service” .
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The two debt collection companies that the attorney general shut down are Emanee Development Inc. and Dial Tech LLC, both from Buffalo.  In addition, he is seeking to have their principal, Lamont Cooper, make restitution.   These two debt collection agencies are now permanently barred from engaging in debt collection.

It was alleged that bill collectors at these companies lied to consumers, threatened them with arrest and sometimes scared them into paying debts they didn’t owe.  In addition, the debt collectors wrongly accused debtors of criminal activity, falsely threatened to file lawsuits, sought collections beyond New York’s six-year statute of limitations, and illegally discussed debts with consumers’ neighbors and relatives.

Consequently, some people who felt threatened or intimidated by these techniques sent payments.

Unfortunately, I frequently hear tales of similar conduct from my Long Island bankruptcy clients, even though such conduct is highly illegal and in violation of the federal Fair Debt Collection Practices Act, as well as other consumer protection laws.

In a press release, Cuomo stated “this judgment is the first step in this office’s expanding investigation into debt collectors that violate the rights of consumers and operate outside of the law.”

Last month, Cuomo also began pursuing fraudulent debt settlement companies that were also taking advantage of consumers.  See New York Commences Nationwide Investigation Into Debt Settlement Industry — Many Offers to Eliminate Credit Card Debt are False and Misleading and New York Attorney General Andrew Cuomo out to do justice against debt settlement companies who are ripping off the American public.

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New York Commences Nationwide Investigation Into Debt Settlement Industry — Many Offers to Eliminate Credit Card Debt are False and Misleading

Posted on Thursday (May 7, 2009) at 11:21 pm to Benefits of Bankruptcy
Consumer Advice
Current Events
Debt Negotiation

 
Rogue debt settlement companies are ruthless in using false and deceptive practices against consumers

Rogue debt settlement companies are ruthless in using false and deceptive practices against consumers

 
Written by Craig D. Robins, Esq.
 
 
So many ripped off-consumers have complained about debt settlement companies that N.Y.S. Attorney General Cuomo says “enough is enough” about the companies’ false and misleading claims
 
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I cannot begin to tell you how many of my Long Island bankruptcy clients have complained about being victimized by debt settlement companies.
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Today, Attorney General Andrew M. Cuomo today announced a nationwide investigation into the debt settlement industry, subpoenaing fourteen debt settlement companies and one law firm, including one from Huntington, on Long Island.
 
In a press release he issued today, he called debt settlement companies “a rogue industry” that gives strapped consumers false hopes while socking them with high fees.
 
Debt Settlement Companies Often Make Promises They Can’t Keep
 
Many consumers are tempted by debt settlement companies that advertise on TV with fancy, large-budget TV commercials which promise to drastically reduce credit card debts.  However, the sad truth is that almost all of these companies engage in unscrupulous practices and make promises about eliminating debt that they can’t possibly fulfill.
 
When these consumers find that the debt settlement companies cannot cure debt problems, they come to me for bankruptcy relief, often in a worse position than they were in before they hired the debt settlement company.
 
To compound the problem, debt settlement companies are very loosely regulated
 
Consumers Are Vulnerable In Today’s Difficult Economy
 
In these very difficult economic times, consumers are very vulnerable and become easy prey for many types of con-artists.  Companies offering debt negotiation often attempt to take advantage of people who are experiencing personal financial problems during these trying economic times. 
 
It seems that many unscrupulous companies are flourishing as the recession deepens, taking advantage of more and more consumers.
 
Just last month I wrote about how Cuomo arrested the owner of a Long Island-based process serving company, American Legal Process, for allegedly providing “sewer service” to thousands of New Yorkers owing debt.   As a result of the improper service, individuals would unknowingly default and have judgments entered against them, without the chance to defend themselves.
 
The NYS Attorney General Is Trying To Protect Consumers
 
Now Cuomo is going after debt settlement companies which often prey upon consumers who find themselves unable to keep up with credit card payments during these difficult economic times.   (See Attorney General Investigating Process Servers for Taking Illegal Shortcuts).
 
“Today, millions of hardworking Americans are finding themselves imprisoned by debt.  In response, a rogue industry has stepped in, offering consumers false hope, charging tremendous fees, and leaving them in a worse financial situation,” said Attorney General Cuomo.
 
“Our mission is clear: to hold unscrupulous businesses accountable; to rein in a renegade industry; and to ensure that people are not victimized when faced with financial hardship.”
 
Here is a list of the fourteen debt settlement companies and one law firm that Cuomo issued subpoenas to this afternoon: American Debt Foundation, Inc.; American Financial Service; Consumer Debt Solutions; Credit Answers, LLC; Debt Remedy Solutions, LLC; Debt Settlement America; Debt Settlement USA; Debtmerica Relief; DMB Financial, LLC; Freedom Debt Relief; New Era Debt Solutions; New Horizons Debt Relief Inc.; Preferred Financial Services, Inc.; U.S. Financial Management Inc. (d.b.a. My Debt Negotiation); and the Allegro Law Firm. 
 
The subpoenas seek to uncover the companies’ fee structures, how many people have benefitted from the companies’ services, and what kind of relief the companies are actually providing.
 
Cuomo is also currently investigating Nationwide Asset Services, Inc., based in Phoenix, Arizona, and Credit Solutions of America, Inc., based in Addison, Texas.
 
How Debt Settlement Companies Take Advantage of Cash-Strapped Consumers
 
The debt settlement plans offered by these companies are often inherently flawed and, based upon consumer complaints, it appears that many consumers are being misled regarding the nature of the services offered by these companies. 
 
For example, some companies falsely represent that they can reduce consumers’ credit card debt by as much as 75 percent through negotiations with creditors.  In addition, the companies often take their fees up front and keep their fees even when they do not provide the promised services.
 
The debt settlement plans are generally premised on consumers aggregating savings, over one to three years, from which both the payment of the company’s fees and any negotiated settlement are to be made.  Yet most consumers who are targeted by these companies are unable to meet the savings requirements because of their precarious financial situation. 
 
Even for those consumers who can meet the requirements set out by a plan, their amount of aggregated savings is ordinarily insufficient to settle their debts.  As a result, many consumers find themselves worse off financially because of these debt settlement plans.  As a result, many then come to me to discuss eliminating the debts through bankruptcy, which in many cases, they could have done in the first place.
 
Consumers who believe they are being defrauded by a debt settlement company are urged to contact the Attorney General’s office at 800-771-7755 or to visit the Attorney General’s web site at www.oag.state.ny.us.
 
There is a Major Distinction Between Debt Negotiation and Debt Settlement
 
The services offered by the debt settlement companies are very different from debt negotiation services offered by certain law firm such as my own.  With debt settlement companies, the consumer makes monthly payments to the company, and the company first applies these payments to their own fees before any settlement is actually made.
 
Frequently, they sign up consumers who they know, or should have known, would not be able to complete the program.  What’s more, the companies keep the fees even when services are not provided!
 
Debt negotiation offered by attorneys, however, is much different and involves negotiating settlements with the creditors.  The client typically does not pay any advance fees, other than an initial retainer.
 
About the image and the artist
 
The fantastic image above, entitled, “Sea of Debt” is printed with permission from Memphis illustrator, Shane McDermott, who also teaches illustration and sequential art at Memphis College of Art.  Please check out his other work, which is listed on his blog, The Flying Bloghouse.
 
Shane considers this image to be one of his favorites. It heralds the beginning of when he developed his expertise with inking — two years after he started using a brush.  Although he may not have intended it at the time, the image superbly illustrates a consumer’s frustration in protecting valuable assets from the predatory characters in the debt settlement industry.
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About Us

Craig D. Robins, Esq. is a Long Island bankruptcy lawyer, who is focused primarily on helping individuals and families, find solutions to their debt problems. Read more »

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Craig D. Robins, Esq.
35 Pinelawn Road, Suite 218E, Melville, NY 11747.

Tel : 516 - 496 - 0800

CraigR@Craigrobinslaw.com