Financially distressed consumers have been flocking to debt settlement companies during the economic downturn, hoping to avoid bankruptcy and limit damage to their credit scores. Unfortunately, some debt settlement companies promise more than they deliver, and charge exorbitant fees to consumers.
Texas Attorney General Greg Abbott sued Richardson-based Credit Solutions of America, Inc., in March 2009, alleging that CSA has defrauded Texans by failing to negotiate settlements with consumers’ creditors. Dallas-based Debt Settlement America is also under investigation.
Debt settlement companies know they have to clean up their reputation. “We’ve got to clean ourselves up fast,” said Scott Johnson, chief executive of U.S. Debt Resolve, a Dallas-based debt settlement company. Proposed legislation would set strict rules on how debt settlement companies operate, he said.
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