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Debtors Fight Back
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July 2012
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Legal Helpers Debt Resolution Pays $2.1 Million for Rent a Lawyer Scheme
Legal Helpers Debt Resolution Pays $2.1 Million for Rent a Lawyer Scheme
By
Kenneth Long
on July 17, 2012
Illinois Attorney General Lisa Madigan secured $2.1 million in restitution for Illinois victims of the national debt settlement company. She has also banned the company from taking on any more Illinois clients.
Madigan's office has been investigating Legal Helpers Debt Resolution soon after debt settlement legislation banned the charging of advance fees for debt settlement services. Federal and state laws were passed in 2010 that allowed firms to charge fees only when a settlement was successful.
The massive loophole that was created by those laws involved an exception for attorneys who assist with debt settlement. Since it is standard practice for a lawyer to charge a retainer and bill for services as they are rendered, this exception was allowed by the laws.
Many debt settlement firms like Legal Helpers discovered that they could get around this advance fee ban by partnering with law firms. While this is technically legal when the advance fees are charged for actual legal work completed by the attorney, debt settlement companies did not want to actually pay for legal services.
Instead, Legal Helpers and other debt settlement companies simply wanted to license the name for their use, and create the appearance that debt settlement activities were conducted by the law firm. In all actuality, lawyers had nothing to do with actual cases, which were handled almost entirely by low-paid paper pushers who sent out form letters to clients' creditors, something the client could have
done on their own for free
.
This model is commonly referred to as the rent-a-lawyer scheme. Really what they are paying for is the ability to avoid the ban on advance fees by pretending that those services are actually being rendered by licensed attorneys. While this trick has fooled many people, it did not fool Attorney General Lisa Madigan. She made the following comment in her office's press release:
"This company was fronting as a law firm claiming to help consumers reduce their debt, but in reality, their scheme had nothing to do with the practice of law. The company's primary purpose was to squeeze thousands of dollars in illegal upfront fees from struggling families for supposed debt relief that never materialized."
Instead of throwing good money away at charlatans who claim to reduce bad debts, victims should contact her office for assistance or connect "with legitimate credit counseling agencies." Her office is assisting victims recover fees that were illegally collected by the firm. Furthermore, she wants to know if you were similarly affected by other debt settlement companies that may have violated debt settlement laws by engaging in similar rent a lawyer schemes.
How have you been affected by a debt settlement company? Have you been sued? Is your credit destroyed? Did they actually live up to their promises?
Posted:
7/17/2012 11:47:34 AM
by
Ken Long
| with
0 comments
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