Debt Consolidation Scam Artist? |

Debt consolidation and settlement remains a sound option for consumers in serious financial straits. But consumers must do their research before signing on to work with any company that specializes in debt management. Otherwise, they’ll end up working with someone like Chicago lawyer Robert Lock. This attorney faces serious charges from credit giant Capital One and the West Virginia attorney general, both of whom allege that Lock and the debt management company he operates, Credit Collections Defense Network, promised consumers they’d settle their debt and boost their credit scores, but then did nothing for them.

Legal Problems

According to a story in the Chicago Tribune, West Virginia officials say that Credit Collections Defense Network promised clients that it could settle their credit-card debt for less than what they owed. The company also promised that clients would boost their credit scores if they followed the firm’s debt management plan. According to the West Virginia attorney general’s office, the company collected more than $20,000 from about 20 West Virginia consumers who never had any of their debts settled or resolved in any way. Unfortunately, Credit Collections Defense Network is not the only scam artist operating in the debt consolidation and settlement business.

Consumer Research

Consumers in need of debt consolidation or settlement services need to do their own research before signing up with any company that works in this field. Most firms in the business are upfront about the services they offer and the results that consumers can expect. But some are less than honest or ethical. Before signing up with a debt consolidation or settlement firm, consumers need to request these companies’ fees in writing. They also need to know exactly what interest rates they’ll be paying on any debt consolidation loans. Finally, they must ask companies how they work. If the firms promise to settle consumer debt, consumers need to ask how these companies do that.

Due Diligence the Key

As when signing up for any financial service, the onus is on consumers to do the research necessary to determine whether they’re getting a fair deal or they are being scammed. This requires consumers to ask the right questions, and to be willing to demand to have the answers to these questions put in writing. When reading about companies such as Credit Collections Defense Network, it’s little wonder that so many states either have or are debating laws to regulate the way debt management firms operate. Debt consolidation and settlement services are a financial safety net for many consumers. But for those who work with dishonest or unethical companies, it can also be a further drain on their already stretched finances.