Beware of companies promising to erase your debt for pennies on the dollar.
Recently a lawsuit was filed against Freedom Fidelity Management, Freedom Financial Management, and named Alliance 8. All of the above are the same business entity. The complaint includes unlawful business practices such as illegal fee provisions contained in contracts, misconduct and non-compliance of financial industry laws in various states including Washington and California.
Laws in various states across the county dictate the amount a debt consolidation company can charge. Initial fees as low as $25 and total fees of 15% are standard. The idea is to not burden the debtor any further.
One client of Freedom Financial writes that:
The “application” for debt reduction from Financial Freedom Of America turned out to be a flow blown contract allowing them to withdraw $300 a month from my bank account as well as a $299 cancellation fee.
The “welcome kit” turned out to be a way for me to lose my power of attorney for unlimited amount of time, as well as allow them to monitor my savings at all times. And to get me to open an account they have control over and not me.
Now that’s just scary.
The sense of relief one feels at the prospect of being released from years of debt can be overwhelming and extremely inviting. As always, please read the fine print, and do research. There are laws in place with the specific purpose of protecting the public.
If the company you are considering is not following these laws, move on, there are many that are including many non-profits such as these listed below in California: