Debt Relief USA Relieved of its Debt

A bankrupt debt-relief company has been excused from a judgment of nearly $20 million.  Debt Relief USA is, however, permanently banned from marketing any financial products or services.

The Federal Trade Commission (FTC) charged that Debt Relief USA lured consumers nationwide into paying thousands of dollars in up-front fees, but in most cases failed to actually reduce their credit card debts, and in many cases left them even deeper in debt.

According to the FTC, Debt Relief USA made deceptive claims that consumers who enrolled in their program could eliminate 40 to 60 percent of their credit card debt and be out of debt in 24 to 48 months.  The FTC complaint charges that few consumers received the promised results.

Under the proposed settlements, the company and its owners are required to protect and properly dispose of customers’ personal information. They also are prohibited from misrepresenting relevant facts to consumers.

The proposed settlements also impose a $19.7 million judgment against the firm's principals, which will be suspended because of their inability to pay.  If it is determined that the financial information they gave the FTC was untruthful, the full amount of the judgment will become due.

Bankruptcy proceedings

Through settlement of a separate action brought against Debt Relief USA by the Attorney General of Texas, consumers have received $3.7 million in refunds from the company’s bankruptcy estate and will receive additional distributions soon. 

The FTC participated in the bankruptcy proceeding and worked with the Attorney General of Texas to ensure maximum benefit for consumers.  Because the Texas settlement recovered all available company funds and provided refunds to consumers, the Commission’s settlement with the company does not involve monetary relief.

Consumers looking for help with credit card debt should be wary of anyone who tells them to stop paying their bills, to pay someone other than their creditors, or to stop talking to their creditors.  Consumers should also be careful about paying for financial assistance before they receive it.