Thomas F. Miles, Attorney and Counselor at Law
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Debt relief scams do nothing to help unmanageable debt

There are rules governing how businesses are allowed to market their products and services. These laws are designed to protect consumers in California and other states from fraudulent practices. Companies found to be in violation of these laws may be subject to serious fines. This seems to have been what one company did when offering services that it claimed would help consumers with unmanageable debt.

It turns out that the company, E.M.A. Nationwide, had been named in a 2012 FTC complaint along with several other defendants. The complaint alleged that the defendants misled consumers while making telemarketing calls to sell their debt relief services that were supposed to help pay, restructure or reduce home loans and other types of debts. However, it turns out the defendants had been collecting fees for their services upfront, which is a violation of current consumer protection laws.

The actions allegedly taken by the defendants violated the FTC Act as well as the Commission's own Telemarketing Sales Rules. Also, the Mortgage Assistance Relief Services Rules prohibit the collection of fees before a homeowner has obtained a written offer from a lender that the homeowner deems acceptable. The court ultimately rejected the defendants' argument that disclaimers and contracts sent to consumers after consumers already enrolled in the services cleared the defendants of any claims of misrepresentation or wrongdoing.

Although the courts fined the defendants more than $5 million, which is to be used to refund affected consumers, many people in California and other states will still find themselves facing unmanageable debt. Many may want to attempt to negotiate directly with creditors. However, if this does not work, one may want to consider filing a personal bankruptcy in order to discharge debts or possibly reorganize debts.

Source: Consumer Affairs, "Mortgage and debt relief scammers shut down -- for good", James Limbach, Sept. 24, 2014

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