This May, the Consumer Financial Protection Bureau (CFPB) and the Department of Justice teamed up to take legal action against two debt relief companies. As The Hill reports, this is the first joint effort of its kind. However, this is not the first time that debt relief firms have been dishonest and made promises they had no intention of keeping.

Our Columbia, SC bankruptcy attorneys are aware of the unfortunate fact that many unscrupulous companies try to take advantage of those who are struggling with debt. This type of behavior is unconscionable as these companies prey on people who already have many financial problems and who don’t deserve to be victimized by those who promise to help.

Debt Relief Firms Face Complaints of Dishonesty

The CFPB has filed civil complaints against two debt relief firms that made false promises to debtors, while the Department of Justice has simultaneously filed criminal charges against the same companies. The DOJ charges include allegations of both mail fraud and wire fraud. This is the first time that the Justice Department has ever filed charges based on a referral from the Consumer Financial Protection Bureau.

The companies involved in the civil and criminal cases have been charged with defrauding more than 1,200 people out of millions of dollars. From 2009 through 2013, one of the companies — a purported “debt relief” company — claimed an affiliation with the federal government that did not exist. The company promised that it could negotiate with banks and credit cards to reduce debt, but then proceeded to take money from customers and ignore them.

The other company made fraudulent telemarketing sales, also making promises it couldn’t keep to debtors. The DOJ is now seeking to seize proceeds from the scams, including confiscating properties and more than 40 bank accounts. The CFPB is focused on getting money back for defrauded debtors.

Protecting Yourself When Seeking Debt Relief

These cases are unique since this is the first time the CFPB and the DOJ have brought simultaneous actions, however this is not the first time that a debt relief company has been dishonest or defrauded consumers.

The CFPB is a relatively new government agency created by the Dodd Frank financial reform bill that was passed in response to abusive bank behavior, which was a top cause of the 2008 financial crisis in the United States. Hopefully, their efforts will be able to stop more dishonest debt relief companies in the future.

Debt relief scams are entirely too common because companies know that people who are struggling with debt are often willing to do everything they can to resolve their debt problems. Unfortunately, debt relief companies can abuse this desperation.

Those who are struggling with debt need to know that debt relief companies are not their only way out. There are legal solutions to resolving debt, including filing for bankruptcy, and an experienced bankruptcy attorney can help to provide real solutions.

Unlike a debt relief agency, a bankruptcy attorney must have passed the Bar exam and must be licensed to practice in the state. Bankruptcy attorneys also must abide by a professional code of conduct that includes putting clients first. Placing your trust in a bankruptcy attorney to help with you debt issues is a far better choice if you are coping with debt so you can avoid potential scams or fraud. There is also a common misconception that seeking help through a debt-relief company will not hurt a consumer’s credit report. Both debt-relief and bankruptcy will result in a lower credit score in the short term. However, bankruptcy offers a permanent solution for dealing with an unmanageable debt load.

If you are considering bankruptcy, contact the Columbia, South Carolina attorneys at Matthews & Megna today at 877-253-7705.