The law office of Tomes & Hanratty, P.C. is continuing its investigation into fraudulent "debt counseling" and debt collections in the subprime credit industry. The investigation arises out of the relatively new phenomena, the sub-prime credit counseling industry. The industry was created creditors (including leading credit card companies) to use third party, allegedly non-profit "credit counseling" organizations, to collect debts from unsuspecting customers who were in financial distress and had turned to what they thought were non-profits for financial help. These organizations advertise and promote themselves as non-profit credit counseling organizations whose main purpose was to act on behalf of the consumer.
These companies advertise that they can settle your debts or help you manage them by negotiating with your creditors on your behalf. They may charge a "set up fee", a monthly fee or a percentage of the debts resolved for you. Many of these companies do not perform as promised, and may actually be operating illegally. New Jersey limits the fees they are permitted to charge, as well as limits the types of companies that can even engage in these activities. In New Jersey the company must be a non-profit and licensed by the state.
These companies are in fact operating as agents of the consumers' creditors. These organizations claim in their advertisements that they will "negotiate" on behalf of consumers with credit card companies to whom consumers owe money — however, there is no real "negotiation" — instead there are back room deals between the creditors and the "counseling" agencies designed to collect as much money as possible from unsuspecting consumers. These organizations are really agencies for-profit organizations, distributing monthly payments they collect from consumers to creditors, while keeping a share for themselves — effectively a payment by Chase that was kept hidden from the consumers; and the agencies also fail to provide comprehensive financial counseling that communicate all options open to indebted consumers. For example, the agencies as a matter of practice fail to discuss bankruptcy as a viable option since that would cut off the flow of money to the creditors. If you feel you have been victimized by subprime credit "counseling," please contact us at TAKE ACTION to explore your legal rights.
The law firm of Tomes & Hanratty, P.C. is investigating claims on behalf of consumers who received credit counseling services from the following credit "counselors": AFS American Financial Solutions American Consumer Credit Counseling Care One Credit Counseling Consolidated Credit Counseling Services Express Consolidation Family Credit Counseling Genus Credit Management Greenpath InCharge Debt Solutions Lighthouse Credit Foundation Novadebt Take Charge America Zero Balance Debt Management one debt management or debt settlement companies are the same These companies advertise that they can settle your debts or help you manage them by negotiating with your creditors on your behalf. They may charge a "set up fee", a monthly fee or a percentage of the debts resolved for you. Many of these companies do not perform as promised, and may actually be operating illegally. New Jersey limits the fees they are permitted to charge, as well as limits the types of companies that can even engage in these activities. In New Jersey the company must be a non-profit and licensed by the state.
