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How to Get Relief after a Debt Settlement Firm Rip-off

By John Ventura, Mary Reed

Beware of debt settlement firms that may be out to fleece consumers in crisis. If you get taken by a disreputable credit counseling organization or by a debt settlement firm, contact a consumer law attorney right away.

The attorney will advise you of your rights. He may recommend sending a letter on his law firm stationery to the credit counseling organization or debt settlement firm threatening legal action unless the firm makes amends to you (such as by giving you your money back).

The credit counseling organization or debt settlement firm may agree to the attorney’s demands in order to avoid a lawsuit. If it does not respond or refuses to do what the letter asks, you can decide if you want to go forward with a lawsuit.

Assuming that you have a strong case, the attorney will probably represent you on a contingent fee basis. This means that you won’t have to pay the attorney any money to represent you. Instead, the attorney gambles that you will win your lawsuit, and the attorney will take his fee from the money that the court awards you as a result.

If you lose your lawsuit, you do not have to pay the attorney a fee. However, depending on your agreement with one another, win or lose, you may have to pay the attorney’s court costs and any other fees and expenses related to your case.

Regardless of whether you sue the credit counseling organization or debt settlement firm, you should file a complaint against it with your state attorney general’s office, your local Better Business Bureau, and the Federal Trade Commission (FTC). Although none of these organizations can help you get your money back or undo any damage to your credit history and your FICO score, other consumers who may be thinking about working with the same credit counseling agency or debt settlement firm may think twice after reading your complaint.

Also, if your state attorney general’s office or the FTC receives a lot of complaints about the credit counseling agency or debt settlement firm, it may take legal action against it. For example, it may file a class action lawsuit on behalf of everyone who was ripped off.