As Rachel Abrams and Jessica Silver-Greenberg write for the New York Times Dealbook blog (“Companies That Offer Help With Student Loans Are Often Predatory, Officials Say“), Illinois became, on Monday, the first state to sue debt settlement firms over student loan scams.
Two suits brought by Illinois Attorney General Lisa Madigan against the debt settlement firms Broadsword Student Advantage and First American Tax Defense allege that these firms targeted and “duped” debtors into paying upfront for help with student loans – help that didn’t come.
Abrams and Silver-Greenberg quote Madigan: “It’s just […] the latest scam on the largest group of people who are struggling with the most debt,” referring to those who owe thousands on student loans.
Many bankruptcy and consumer rights attorneys offer debt settlement services, but generally as part of a holistic package, i.e. creating and executing on a real strategy for debt reduction and elimination. Attorneys don’t necessarily run debt settlement firms like Broadsword Student Advantage, and you should beware of claims that these firms are affiliated or even part of government programs for debt relief – most likely they aren’t.
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Illinois AG Sues Debt Settlement Firms Over Student Loan Scams