According to an article in the Dallas Morning News, Texas Attorney General Greg Abbott successfully argued that Debt Relief USA’s bankruptcy case should be converted from a reorganization to a liquidation, increasing the chances of recovering $4.6 million owed to former customers of Debt Relief USA.

The article said:

“Debt Relief USA promised to help consumers with large debts by having customers pay the company instead of paying creditors. Under its business model, Debt Relief would negotiate with creditors to reduce the amounts consumers owed.  The company has collected “set-aside” money from its customers as part of its bankruptcy process; that’s not legal, according to Abbott… Abbott’s office is also seeking penalties under the deceptive trade practices act against Debt Relief USA. The company had 2,500 customers who Abbott said didn’t receive the help they paid for.”

It’s good to see our Attorney General getting tough with unsavory “debt settlement” companies. We’ve seen up-close what happens to unsuspecting debtors when they rely on the hollow promises of debt settlement companies such as Debt Relief USA.  Cliff Mayer was one of the unfortunate victims of Debt Relief USA. He paid this debt settlement company $30,000, and then discovered they filed for bankruptcy and had failed to make good on their promises. Read more about his story here: http://www.allmandandlee.com/bankruptcy_blog/dallas_bankruptcy/credit-counseling-debt-relief-or-bankruptcy-wrong-choice-robs-man-of-30000-in-horrifying-tale/. Also read more about the Debt Relief USA case here: http://www.allmandandlee.com/bankruptcy_blog/bankruptcy/debt-relief-usa-inc-files-bankruptcy/.

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