West Virginia Court Bans New York, Illinois Debt Settlement Lawyers

West Virginia is the latest state to crack down on lawyers operating a debt settlement companies. Acting on a suit filed by West Virginia Attorney General Darrell McGraw, Kanawha County Circuit Court Judge Jennifer Bailey permanently enjoined Illinois attorney Robert K. Lock, Jr., New York lawyer Philip M. Manger, and their company, CCDN, LLC, d/b/a Credit Collections Defense Network, from doing business in West Virginia.

McGraw had sued CCDN and its owners, claiming they were engaged in unlawful debt settlement activities. He alleged the defendants were not licensed to practice law in West Virginia and were running a debt settlement business that provided no relief to the state’s consumers.

CCDN, a Nevada company based in Chicago with additional offices in Brick, NJ, claimed to assist consumers who were struggling financially by providing debt settlement services. 

"The use of debt relief services can have serious legal and financial consequences and my office will continue to scrutinize the debt relief industry to protect our consumers," McGraw said. "We are particularly concerned with attorneys from out of state claiming to provide legal services when they cannot legally practice law in West Virginia."

The Circuit Court granted the permanent injunction and also imposed a $130,000.00 civil penalty against each defendant and entered judgment for $21,985.15 in restitution to consumers who paid the defendants but received no meaningful debt settlement services in return.

New rules

Reacting to widespread abuse of financially vulnerable consumers, the federal government recently adopted rules restricting how debt settlement services can be sold over the telephone. 

Debt settlement companies such as CCDN contact consumers offering to negotiate with creditors on behalf of the consumer. Additionally, the companies claim to develop payment plans that help consumers repay outstanding debts, obtain deep discounts, or eliminate the debts altogether, allowing consumers to avoid lawsuits or bankruptcy. However, after making payments to debt settlement companies, consumers often receive little or no debt relief and can find themselves in even worse credit and financial situations.