Since our investigation into debt relief and debt settlement companies aired last month, the industry has been in the news. The Texas Attorney General has charged a debt settlement firm, called Credit Solutions of America (CSA), with being an "unlawful scheme that defrauded Texans with financial problems."
The allegations against CSA are similar to the complaints made about another debt relief company, Clear Breeze Solutions, which was in our story. In both cases, customers complained that the firms took big money up front, promised to help them shed large amounts of debt, but never did anything for them.
The woman we profiled in our story is now suing Clear Breeze Solutions, and is being represented by Texas RioGrande Legal Aid, where they have been trying to help a number of people who have gotten into trouble with debt relief companies.
Just like any business, there are good companies and bad companies. But so many debt relief / debt settlement companies have sprung up lately and started advertising heavily, state lawmakers have become concerned that the current law regulating these businesses isn't specific enough. Legislation being considered in Austin would require debt settlement companies to register with the state, adhere to a set of rules, and prove that they are licensed and bonded.
The bill would also require these companies to shoot straight with consumers about the damage that could be done to their credit rating if they attempt debt settlement, as well as the possibility of being sued by creditors.
The AG's office cautions consumers to research any company offering debt reduction, with sources like the Better Business Bureau... so you don't end up in an even deeper hole.
