Jump to Navigation

Government exposes phony debt relief firm

Carrying debt from a student loan can be stressful for people living in Washington, D.C. In order to make ends meet, debtors may pick up extra work or adjust their budget to make payments on time. It can be tempting to work with a debt relief firm to ease the burden. However, as a number of people recently learned, some of these firms are not always what they seem to be.

Recently, the Consumer Financial Protection Bureau determined that a San Diego-based firm was using illegal tactics to prey on people who hold student loans, collecting millions of dollars in the process. Federal law mandates that a firm must have either reduced or renegotiated a debt before it can charge a fee for its services. According to the CFPB, a debt relief firm known as Student Aid Institute violated that law when it forced borrowers to pay as much as $495 upfront.

Student Aid Institute was targeting borrowers with promises of reducing their debt or securing a lower payment amount. In reality, the company was simply charging a fee for what the borrowers could have done on their own and for free, which is working with a federal assistance program. The CFPB shut down the firm and fined its executive $50,000. Student Aid Institute must also cancel any contracts it has with customers, as it was charging a monthly maintenance fee.

People who are in debt should know where to look for help, avoiding the issue of working with a company out to scam people. Anyone who has questions about this issue should speak to an attorney.

Source: The New York Times, “Fraudulent Student Debt Relief Firm Shut Down By Consumer Bureau,” Ann Carrns, April 1, 2016

No Comments

Leave a comment
Comment Information
Start Right Now

Bold labels are required.

Contact Information

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

Visit Our Bankruptcy Law Website Subscribe to This Blog's Feed
Office Locations

1115 Massachusetts Ave NW,
Washington, DC 20005
Phone: 202-559-1428

10512 Pohick Court,
Fairfax Station, VA 22039
Phone: 703-550-7030

6926 Seven Locks Road,
Cabin John, MD 20818
Phone: 301-890-4500

Toll-Free: 877-441-4076
Fax: 202-638-5858

Twitter link