I also regrettably got sucked into their debt settlement program in 2006 . I paid over $14, 000.00 in upfront fees. I settled 3 accounts on my own. They settled four. I am still fighting to get a refund of my money. Thus far, I have been trying to get the Michigan Attorney General Mike Cox to help me, but it doesn't seem like he has done much - simply sends my letters on to DSUSA and then sends me their replies.
I only had one negotiator (Carla Cannon) who seemed to try to actually settle accounts. I can't remember how many different negotiators they would give me. Always someone new who did not know anything about my situation. Very, very frustrating and what a painful experience this has been.
I also filed a complaint with the BBB. I guest I need to go back on their website to see if they have done anything. I know that there are tons of complaints filed with them against Debt Settlement USA.
I am so glad I discovered this website while searching for information to send to they Michigan Attorney General. Thanks.
I was recently on a consultation with a consumer and she asked me to review a contract that she received from debt settlement usa. She had enrolled into their program a few months ago and now she was starting to get the feeling that they were much more interested in collecting their fees from her than they were in helping her settle her debts. After 5 months in their program she had given them around $4500 in fees and as a consequence didn’t have much money at all to even settle her smallest debt.
I told her that I had heard of debt settlement usa, but with over 2, 000 or so settlement companies out there, it is easy to get them confused. I informed her that this sounded like the typical high upfront fee shenanigans that most debt settlement companies hook consumers into. I didn’t have a copy of their contract on hand so she faxed it over, to get my opinion. When I received the contract, unfortunately my hunch was confirmed.
Here are the facts in the contract
1. They charge 14% of a clients total debt as a fee
2. They charge their entire fee over the first 11 months in their program
3. Their fee is not contingent on any sort of results
4. If you stop making payments, they can still keep their fees, even if they haven’t settled any debt
Here are just a few of the things I found on the web
1. They have 158 consumer complaints against them at the bbb
2. They are currently under investigation by the new york state attorney general
3. They paid a fine and refunded all clients in vermont for violating the “vermont consumer fraud act”
4. There were numerous consumer complaints found during a few google searches
Here are my thoughts
The first thing that leaped off of the contract at me was their fees. Debt settlement usa charges 14% of a clients total debt as a fee plus a 29 dollar administrative fee. Now, most debt settlement companies charge 15% of a clients total debt, so one might conclude that debt settlement usa must be better. Well I guess everything is relative, I personally think both of them are way too high.
However, even if a consumer decided that 14% of their total debt was a fair fee, here is the kick in the gut. They are going to collect that entire fee over the first 11 months into the program. Let me say it a different way. They will collect most or likely all of their fee before they even settle the first debt.
Another thing that I saw, or rather didn’t see, was a clear explanation of the fees. Sure they told her that her fees were going to be about 500 dollars a month for 11 months but I sure didn’t see that fee totaled anywhere. I guess if someone saw the number $5, 500 in fees upfront, they might just think twice about this program.
After crunching their numbers and double checking their fuzzy math, I actually got pissed. Ya I was literally pissed off about the lengths that these programs will go to to trick consumers into signing up. Let me show you what I mean. This client had about $40, 000 worth of debt. Debt settlement usa wanted to put her on their plan where she would pay about $600 a month. About $500 of that would go straight to them for the first 11 months. So after 11 months, the client would have paid $6, 600 yet, only have $1, 100 that she might be able to use to settle her debts. How much of that $40, 000 is she going to be able to settle for $1, 100? Now you can start to see why I was getting angry when I was reading this.
To add insult to injury, they are misleading her and then covering their butts in the fine print. When I use a real calculator and check their fuzzy math, the only way for this client to finish up the program in the amount of time that they estimate and still cover their fees, would be if they settle all of this client’s debt for about 34 cents on the dollar. Hmm, according to the president of debt settlement usa in response to a complaint against them, he claimed that their settlements average about 43 cents on the dollar. That means, the program is probably going to last longer and definitely cost more than their rosy scenario that they are giving the client.
In fact, lets look at the fine print. In the fine print the consumer will learn that the quoted numbers are certainly not a guarantee. (see fuzzy math problem above). We also learn that their fees are not contingent upon any specific result. They consider the fees earned when they receive them and my favorite, if you stop making payments for any reason, debt settlement usa is entitled to keep everything you have given them up to that point.
I think I am starting to understand why they have been subpoenaed and are under investigation by the attorney general in new york. I also recently read that they had to give full refunds to all of their clients in vermont because they failed to offer a 3 day right of rescission and violated the “vermont consumer fraud act.”
They have 158 complaints with the bbb and some quick google searches for “debt settlement usa” scam and “debt settlement usa” rip off, revealed quite a bit of unhappy clients.
I don’t know the principle officers of this company or anything more about this company than what I read in their contract and I found on the web. However, from what I do know about them, I would certainly not recommend them to any consumer. Even if you discount the attorney general investigation and all of the consumer complaints, I personally don’t feel that charging a financially struggling consumer 14% of their debt (all upfront) is at all beneficial to them.
Debt settlement usa makes all of their money upfront. Their fee is not based on their performance. If their client has a financial mishap and can’t afford to complete the settlement program, they can keep their fees. Clients are not likely to settle any of their debts with creditors for over a year. If debt settlement usa goes out of business or is shut down by regulators, clients will not likely get their money back. Debt settlement usa has no financial incentive to provide a client with support after they have paid all of their fees.
When I take all of these things into account, I see an unconscionable contract. I see every benefit is provided to debt settlement usa and I do not see any consumer benefits. Now, I am human, and I could be missing something, so if someone can explain to me how charging a consumer 14% of their debt, upfront, pushing out settlements for over a year and providing no guarantees, is in the best interests of the consumer, I would appreciate it if you would set me straight. Until then, I must recommend that a consumer not enroll into the program currently offered by debt settlement usa.
I joined Debt Settlement USA in November, 2008. Since that time, I've been scammed out of at least $1200, and absolutely no services have been provided. My credit score is down, and I continue to receive harassing calls from creditors, who threaten legal action. My credit accounts continue to accumulate late fees, as well as other charges. I have just sent a notarized letter, revoking my POA, and went through the inconvenience of having all my bank account numbers changed, in order to prevent DSUSA from accessing any of my funds. I also filed a complaint with the Better Business Bureau - since November, this company has gone from a C - rating, to no rating at all. The BBB is investigating all the complaints received about this company. I check once every week or two since January, and they are still investigating.
My attorney has been notified, and I have every intention of contacting the Attorneys General of both Arizona and California, where I live. Is anyone interested in a possible class action lawsuit? I haven't looked into it yet, but it would help to know how many people might be interested in joining.
For those of you who are readers, the March, 2009 issue of Consumer Reports has a thorough report of current economic-based scams (pages 22-25). There is a section called 'High fee debt settlement', and Debt Settlement USA is the only company mentioned in this 1+ page section. I would suggest you read it, if possible.
I would strongly advise anyone who is considering looking at a debt settlement program to avoid Debt Settlement USA. I cannot give you a strong enough warning about this company as well as other companies who claim to settle your debts in a set amount of time.
This is a total scam that will result in collections lawsuits as well as pain & embarassment for you.
Debt Settlement USA represented themselves as having relationships with many of the well known creditors and that their program was in fact legitimate and accepted as an alternative to bankruptcy. This is NOT the case.
Debt Settlement USA sends power of attorney letters to your creditors and that is the extent of their involvement until enough funds are built up in your account to settle with a creditor. They also tell you not to make payments to your creditors during this time. This is absolutely the WORST thing you can do.
In fact, I was told by one of my creditors that they will often move directly to a lawsuit when a debt settlement service is involved.
To date, they have NEVER contacted ANY of my creditors...
Having chose to go this route and with Debt Settlement USA was probably the worst thing I could have ever done.
I have just "fired" Debt Settlement USA"and am now dealing with two, possibly three collections lawsuits against me. I also had a process server knock at my door.
I have requested a refund from these people but that may never happen and may consider recuiting other"victims"of Debt Settlement USA" for a class action lawsuit.
Best of luck!
In a time of dire financial crisis and coming to the point where my credit card bills were becoming very difficult to pay, I turned to Debt Settlement USA for help. I was told to stop paying my creditors and start paying the company $811 a month and deceived into believing that they would get my creditors to stop calling me and to enter into low, desirable settlements on my credit card balances. In the reality, they took my money, but never provided any services to me. The creditor calls were incessant, and anytime I had a question or concern it took multiple phone calls and messages left before I could get a response from my "negotiator." Several times, I resorted to calling the "customer service" department or the original person I had spoke with when signing up in order to get a response from anyone. I was never informed of what, if any, conversations or actions had taken place on my behalf, and have no reason to believe that any actually did.
One time a local legal firm who had acquired one of my accounts managed to get ahold of me (it was a local number so I assumed it was a client and answered the call). I was informed that they had never been contacted by Debt Settlement USA and that they were not surprised--they had had other cases where the defendant thought they were being "represented" by this company only to find out later that nothing was being done on their behalf. I dumped thousands of dollars into this company and now all I have to show for it is a ruined credit report, non-stop creditor calls, and pending lawsuits.
When I enrolled in the program, my representative (i.e. salesperson) informed me that if the program ever became more than we could afford to keep up with, we always had the option to get out of it and request our money back. He failed to mention that if I did that, all I would get is a rude, condescending answer that it was my fault the program failed (I stopped paying their fees after 7 months when nothing had happened for us in that time). He said they had done a large amount of work with my accounts and that I was not entitled to any refund--even though I never saw any decrease in creditor contact, never was offered or even asked if I could afford any settlements, and never received any contact from the company without fervent effort on my own part.
I'm now in the process of trying to save up for a bankruptcy lawer and get caught up on late mortgage payments so that I can file for bankruptcy and put a stop to the lawsuits that this company has brought up on me--something that would be easily paid for with a refund of the $5677.21 of fees that they are holding for all the "work" that they did not do on my behalf. In summary, stay FAR away from Debt Settlement USA. They run a greedy and deceitful operation and have no intention or desire to help you with your financial situation, and when they cause more problems than they solve, they are unwilling to work with you and make things right. I sincerely hope that this post helps someone else avoid the financial and emotional turmoil that working this company can create.