AG Cooper goes after Chicago debt settlement scheme
Release date: 5/16/2014
Company collected more than $1.1 million in fees, did little to help consumers
Raleigh: Attorney General Roy Cooper has filed suit against a debt settlement company operating out of Chicago that took consumers’ money but failed to provide them with expertise and help to reduce their debts.
“Consumers overwhelmed with debt need real help, not schemers looking to make a quick buck off of them,” said Cooper. “We pushed for a strong law in North Carolina that makes it illegal to collect money upfront for debt relief work and we’ll keep enforcing the law against violators.”
On Thursday, Cooper filed suit against Legal Helpers Debt Resolution, PLLC (Legal Helpers) and its principals Jeffrey Hyslip, Jason Searns, Jeffrey Aleman and Thomas Macey seeking to stop their illegal debt relief scheme in North Carolina. From 2010 through April 2012, approximately 412 North Carolina consumers lost more than $1.1 million in fees to the scheme. Under a North Carolina law that Cooper helped win, it’s illegal to collect advance fees for debt settlement services.
Ultimately, Cooper is asking the court to ban the defendants from offering debt settlement services in the state. The proposed court order seeks to prevent the company from taking payments or entering into contracts with any future customers in North Carolina. Cooper also wants the company to pay refunds to previous customers and civil penalties.
As alleged in the complaint filed with the court, Legal Helpers sought out financially distressed consumers with significant unsecured debt, claiming it could reduce their debt by up to sixty-five percent and have them debt-free in three to four years. Representatives also told consumers that Legal Helpers was one of the largest debt resolution firms in the nation and that they would be represented by an attorney.
Since 2010, Cooper’s Consumer Protection Division has received 61 complaints about Legal Helpers.
Legal Helpers’ practices are best described by the experience of one North Carolina couple outlined in the complaint. The couple was more than $103,000 in debt when they responded to a mailing from Legal Helpers. Legal Helpers led them to believe it was a law firm specializing in debt settlement and convinced the couple that its services could help them pay off their debts in five years. They signed a contract to pay $1,334.27 a month for three months and were advised not to pay their creditors directly or have any contact with them.
According to the couples’ affidavit filed with the lawsuit, not one penny of $4,002.81 they paid in the first three months went to help pay off their debts. Instead, Legal Helpers kept their money as fees. The consumers eventually paid more than $6,900 to Legal Helpers with only a small fraction, $234.87, going toward reducing their debt. When a creditor sued the couple for unpaid debts, Legal Helpers did not provide them with any legal representation.
The North Carolina law that bans advance fees for debt relief also applies to foreclosure and loan modification help. Cooper’s Consumer Protection Division is part of a multistate investigation looking into The Mortgage Law Group, a company related to Legal Helpers that promised to help improve the terms of consumers’ mortgages and save their homes from foreclosure.
“There is no fast, easy way out of financial troubles,” Cooper reminded consumers. “Don’t put yourself deeper in a hole by falling for empty promises to settle your debt for pennies on the dollar.”
For tips on getting out of debt or to file a complaint with Cooper’s Consumer Protection Division, visit www.ncdoj.gov.
Contact: Noelle Talley (919) 716-6413