How Not To Repair Your Credit

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You might think that a business couldn't squeeze much money out people who are tens of thousands of dollars in debt, but where there's a will, and perhaps a paucity of ethics, there's a way.

This week's Houston Press cover story takes a look at a rift between two "debt invalidation" companies, in Texas and Illinois, who've been getting debtors to fork over thousands of dollars to allegedly make their debts disappear. The companies are acting with the belief that the entire Federal Reserve and banking systems have duped the public into thinking that "credit" is the same as "money," when in fact applying for a credit card automatically means the issuing bank owes the consumer money.

Whatever their beliefs or promises, these companies have earned the ire of more than 40 state attorneys general (including Texas's Greg Abbott), who in October wrote a letter to the secretary of the Federal Trade Commission, supporting the FTC's proposed amendments to expand the Telemarketing Sales Rule to include debt relief services.

"...the severity of the harm complained of by consumers is reflected in the fact that over the past five years, twenty-one states have brought at least 128 enforcement actions against debt relief companies," the letter states.These included actions for "unsubstantiated claims of consumer savings, deceptive representations about the length of time necessary to complete a debt relief program....deceptive disparagement of bankruptcy as an alternative for debtors," among others.

Also, "the number of complaints the states have received against debt relief companies, particularly debt settlement companies, have consistently been rising and have more than doubled since 2007. Consumers who complained to the states received either minimal or no debt relief after paying substantial amounts to debt relief companies."

Sometimes it can be hard to find out who's behind what company, and whether certain companies are related. Much of this week's feature centers around the Chicago-based Credit Collections Defense Network, which we forgot to mention also operated under the name Legal Debt Cure. When we asked Philip Manger, a managing director of the companies, why it appears that the same company operates under two different names, he explained in an e-mail that "Legal Debt Cure, LLC, was created to be the exclusive marketer for" Credit Collections Defense Network's program. 

Besides being nonsensical, it doesn't seem to hold up if you actually look at Legal Debt Cure's website, which makes no mention of Credit Collections Defense Network and doesn't even list the names of the founders (Manger and Robert Lock) -- referring to them only as attorneys with "decades of litigation and business experience in credit fair practices law." We're not exactly sure what "credit fair practices law" is, because that faux-legal terminology doesn't seem to exist outside of the LDC website, but moreover, it is simply not an adequate description of Manger's and Lock's careers.

Although a lot of these companies advertise themselves as "Christian" or somehow biblically-based, they simply appear to be wolves in sheep's clothing, preying on the terribly vulnerable -- and oddly lucrative -- demographic of debtors. Caveat freakin' emptor.    

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