CHICAGO - Legal Helpers, a Chicago based debt settlement firm, was ordered to Cease and Desist its unlicensed business today by the Department of Financial and Professional Regulation (IDFPR). The Department also issued a fine of $314,000 – $1,000 for each of the 314 clients it has identified thus far. This is the first disciplinary action taken since the Debt Settlement Act took effect last August.
The order details the experience of one customer: Legal Helpers charged a client (T.G.) an “initial flat fee retainer payment” of $500, and a $50 monthly maintenance fee. In addition, Eclipse, a subcontractor of Legal Helpers, charged a service fee of 15% of the total scheduled debt to be paid in installments commencing immediately upon preparation of the debt resolution plan. Between August 13, 2010, and May 20, 2011, T.G. paid $3,411.92 to Legal Helpers and its subcontractor – $3,121.91 in fees and only $290.01 set aside for the payment of debt. Further, there is evidence that neither Legal Helpers nor its third party assigns settled any of T.G.’s debts.
“The Debt Settlement Act seeks to protect families that are struggling with debt from being preyed upon by companies posing as rescuers,” said Brent Adams, Secretary of Financial and Professional Regulation. “The State will move aggressively whenever we learn of the exploitation of financially vulnerable families.”
The Debt Settlement Act includes several consumer protection mechanisms not followed in the case of T.G. The Act prohibits charging an upfront fee except for a one-time enrollment fee of $50. The total payments may not exceed 15% of the amount of money the client saved as a result of the settlement company’s services. Finally, the law states that any contract for debt settlement service that does not comply with the Act shall be treated as void, and may not be enforced by any federal or State court or any other person. Upon notice of a void contract, the debt settlement provider shall remit a refund to the consumer as if the contract had been cancelled.
In addition to operating a debt settlement firm in Illinois without the appropriate debt settlement license, IDFPR learned that despite the name, “Legal Helpers”, the company does not provide legal representation to consumers or otherwise act in an attorney capacity. The person signing contracts with Legal Helper’s clients is not licensed to practice law in Illinois.
A copy of the order is available here.