Minnesota Attorney General (AG) Lori Swanson has sued 6 debt settlement companies on the grounds they were not licensed to do business in Minnesota and overcharged consumers by hundreds of thousands of dollars. She commented:
“People who are swimming in debt are often desperate for a life preserver, but they should know that debt settlement companies usually just anchor them down with even more financial problems . . .”
While it is unclear how the debt settlement companies in the suit operate, many debt settlement companies require monthly payments from consumers. Part of that monthly payment, however, goes towards paying the debt settlement company, and not paying off the actual debt. In addition, many debt settlement companies only make the minimum payments on accounts, and ultimately leave consumers in worse shape at the end of their contract.
California attorney Ben Pavone refuses to pay his credit card debt until Bank of America lowers his interest rate. Pavone has also threatened to sue Bank of America if they try and ruin his credit because of his non-payment.
Pavone asked BOA for an increased credit limit a few months ago, when he needed the extra cash. BOA replied by lowering his credit limit.