Attorney General Schneider and Superintendent Lund Announce Settlements with Debt Management Companies

AUGUSTA — Attorney General William J. Schneider and Superintendent of the Bureau of Consumer Credit Protection William N. Lund jointly announced today that the State has entered into settlements with Legal Helpers Debt Resolution, LLC (“Legal Helpers”) and The Mortgage Law Group, LLP (“Mortgage Law”) that resolve the State’s concerns about their business practices under the Debt Management Services Act and the Unfair Trade Practices Act.

The companies operate as part of a large law firm located in Chicago, Illinois.  Legal Helpers was promoted as the largest debt resolution law firm in the country, with offices in 50 states, and Mortgage Law claimed to have a national reputation for representing homeowners in danger of losing their homes to foreclosure.  Neither company had an office in Maine, but had “partnerships” with several attorneys who were licensed in Maine.  New clients were enrolled by non-law office “strategic alliance partners” that also provided client services for the two companies.

Debt management service providers, including those who claim to arrange debt settlements and loan modifications, are regulated by the Bureau of Consumer Credit Protection.  Any attorney who is licensed to practice law in the State of Maine is exempt from registration as a debt management service provider unless the attorney’s exclusive activity is providing debt management services.  Superintendent Lund did not accept the companies’ claims that their partnerships with Maine attorneys entitled them to a legal exemption, and insisted that they register, which they refused to do.  The Attorney General contended that many Maine consumers never met or spoke with an attorney when they enrolled in the programs, and were misled by claims about their benefits.  Both Legal Helpers and Mortgage Law denied that they have violated any Maine laws.

Under the settlements, the companies agreed not to enroll any more Maine consumers in their programs, and will stop charging monthly fees to consumers who are still receiving their services.  In addition, the companies paid $250,000 in restitution which will be equitably distributed by the Attorney General to the more than 300 Maine consumers who enrolled in their programs.  An additional $15,000 has been paid by the companies to reimburse a portion of the state’s investigative and administrative expenses.

“These settlements send a strong message to others in the debt relief business that the State of Maine will not tolerate those who take advantage of Maine consumers in financial distress,” said Attorney General Schneider.

Superintendent Lund agreed, and said, “The Legislature took steps to protect Maine consumers by requiring debt management and credit counseling companies to obtain licenses and post surety bonds in order to conduct business in our state.  We urge Maine residents to verify the license status of any companies before doing business with those offering debt relief, since Mainers lose tens of thousands of dollars each year to unlicensed, out-of-state companies.”

Consumers are encouraged to contact the Bureau of Consumer Credit Protection to check the license status of debt management companies, and any disciplinary history in Maine, by calling 1-800-332-8529 (in-state) or 207-624-8527.  The Bureau also maintains a roster of licensed Debt Management Service Providers at www.Credit.Maine.gov, under the “Who we regulate” link on the homepage.

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