West Virginia attorney general sues debt-settlement firm

By Oscar Monfort on Apr 23rd, 2010

The attorney general for West Virginia has sued a company to prevent it from practicing law in the state and cease its debt settlement services.

Darrell McGraw's office filed the suit against the Credit Collections Defense Network, which claimed it could help consumers eliminate their debt. The attorney general's filing claims the company would respond to collections lawsuits with form letters, while telling clients to claim they never incurred the debt.

As a result of the company's actions, a number of citizens in the state saw major drops in their credit scores.

"Although the debt settlement approach to debt relief may work for some persons, the service has legal consequences and should only be offered in West Virginia by persons licensed to practice law in the state," McGraw said.

Attorneys general in other states have also taken action against debt settlement companies, including Illinois' Lisa Madigan. She has proposed a law in the state that would require these companies to register before providing services and also puts caps on fees charged to consumers.

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