The Wisconsin Department of Justice Files Five Actions Against Debt Adjustment Service Companies

The State is seeking enforcement of orders from the Department of Financial Institutions as well as forfeitures, restitution, and compliance with the consumer laws of Wisconsin.

MADISON — The State of Wisconsin, on behalf of the Wisconsin Department of Financial Institutions, Division of Banking (“DFI”), has filed five separate actions against the following debt adjustment service companies:

• Fidelity Debt Solutions, LLC, of California;
• Legal Debt Cure LLC and CCDN, LLC, with addresses in Washington and Illinois;
• FDN Solutions, LLC, doing business as Everest Debt Solutions, of Florida;
• Reliance Financial Inc., formerly known as Frontier Trading Corp., Inc., doing business as Reliance, Inc., of Florida; and
• Loan Workout Consultants LLC, also known as Affordable Mortgage Consultants of California.

Adjustment service companies are required by Wisconsin law to be licensed with DFI. They also are prohibited from charging significant upfront fees for their services. None of these companies was licensed, and each charged significant upfront fees, even after repeated orders by DFI to comply. The State seeks enforcement of DFI's orders, forfeitures, restitution, and compliance with the consumer laws of Wisconsin.

According to the consumer complaints filed with DFI, each of these companies stated that it could reduce a consumer's debt by having consumers deposit monthly payments into a trust account. The company stated it then would negotiate with the creditors to forgive up to 60 percent of the consumer's debt, and use the accumulated funds in the trust account to pay the creditors. Unfortunately, in many instances the upfront fees absorbed most of the trust money such that there were insufficient funds to pay the creditors. In the meantime, since the consumers had been advised to stop paying their creditors, often times the creditors initiated lawsuits against the consumers. One couple paid more than $6,900 without receiving any adjustment services. After the company took fees out of the account, only $2,300 remained for the creditors.

The State of Wisconsin is represented in these matters by Assistant Attorney General Lara Sutherlin. Anyone who believes they may have been harmed by one of these debt adjustment service companies, or a company that offers similar services, should contact DFI at 608-264-7969 or 800-452-3328.