How can I get help with my credit or debt problems?
Look in the Yellow Pages under "Credit & Debt Counseling Services" for a non-profit counseling agency. A non-profit counseling agency will charge either a small fee or no fee for their services, and will not pressure you to make a "donation" to cover their costs. These agencies are usually able to cover their costs with money that they receive from creditors for helping customers to pay back their debts. A counselor will try to arrange repayment plans that are acceptable to you and your creditors. The counselor may also help you to set up a realistic budget.
What are advance fee loans?
An "advance fee" loan is where you are told that you can get a loan or other type of credit, but you must pay a fee before you can apply. Some companies claim they can guarantee you a loan for a fee paid in advance. The fee may range from about $100 to a $1000 or more.
If someone guarantees - or states - that they can arrange to get you a loan or other form of credit, and asks you to pay before you receive the loan or credit offer, be suspicious. If you have bad credit or no credit, a legitimate lender will not "guarantee" you a loan before you even apply. Also, don't think that because you have been "pre-qualified" for a loan, you are guaranteed to get a loan. A "pre-qualified" offer means you've been selected to apply. However, you still must go through the normal application process, and you still can be turned down.
Are the companies that advertise in the newspaper legitimate?
Advertisements that promise loans generally appear in the classified section of local and national newspapers and magazines. They also may appear in mailings, radio spots, and on local cable stations. Often, these ads feature "900" telephone numbers, which result in charges on your phone bill, or toll-free "800" numbers. Unfortunately, you can't tell from an advertisement whether a company is legitimate. In addition, some companies use overnight delivery services instead of the US mail in order to avoid detection and prosecution by postal authorities.
What companies were charged in the District of Columbia's lawsuits?
On November 18, 1999, we filed charges against AmeriDebt, Inc., a debt counseling company based in Germantown, Maryland. AmeriDebt used to call itself American Debt Counseling Association and, before that, called itself Consumer Counseling Services, Inc. Although the names sound similar, the company has no connection with either Consumer Credit Counseling Service or with American Credit Counselors, Inc.
In August, 1999, we sued Infinity Resources Group, Inc., a lender based in the District of Columbia. Many of Infinity's customers have been referred by AmeriDebt.
What did these companies do?
We have filed charges in court, but it is up to the court to determine if the companies have violated the law. We have accused the companies of telling consumers that if they pay an upfront fee to Infinity, and make six monthly payments on time as part of AmeriDebt's program, then they will probably be able to get a debt consolidation loan from Infinity. We allege that most of the consumers who do this are not able to get a debt consolidation loan from Infinity.
We also accuse AmeriDebt of telling consumers that they are a "non-profit" counseling organization. We allege that one of the primary purposes of AmeriDebt's operations has been to generate new business for Infinity, a for-profit company.
What if I have a complaint against a company?
If you are a District of Columbia resident, or if the company is located in DC, you may make a record of your complaint by writing to the Consumer Unit, Enforcement Division, Office of the Corporation Counsel, 441 4th Street, NW, Washington, DC 20001. Based on the seriousness or number of complaints received against a company, the Office of the Corporation Counsel may open an investigation to determine whether the company should be charged with violating the law.