Last week, the Attorney General for the state of New York announced she had filed a lawsuit against nine student loan debt relief companies, a financing company, and two individuals who have leadership roles in these companies. The lawsuit was filed in New York Supreme Court. According to the lawsuit, the defendants used fraud and deception, as well as illegally advertised and sold student debt relief to thousands of consumers nationwide and in the state of New York.
What Companies Are Being Sued?
The student loan debt relief companies named in the lawsuit are Debt Resolve, Inc.; Hutton Ventures, LLC; Progress Advocates, LLC; Progress Advocates Group, LLC; Student Advocates, LLC; Student Advocates Group, LLC; Student Advocates Team, LLC; Student Loan Care, LLC; and Student Loan Support LLC (collectively, “student loan relief defendants”).
Debt Resolve, Inc., a New York company, is the majority owner of two of the other student loan debt relief entities. Bruce Bellmare and Stanley E. Freimuth, the current and past CEOs of Debt Resolve, are also named as defendants. The financing company named in the lawsuit is Equitable Acceptance Corporation.
Details of the Lawsuit
The lawsuit alleges that the defendants use “Student Loan advisers” to sell student loan debt relief agreements to consumers. These “advisers,” the lawsuit claims, are simply telemarketers with no specialized experience. The Student Loan advisers make deceptive and false misrepresentations to consumers. For example:
- the advisers tell borrowers they cannot enroll in debt relief services on their own, when in reality borrowers can work directly with the student loan servicers or the Department of Education to obtain the same services at no cost.
- the advisers tell borrower that they are from the federal government or are working with a federal student loan servicer when they are in fact not affiliated with the government or servicer.
- the advisers represent that the borrower can eliminate some of their student loan debt by making payments to one of the student loan debt relief companies, when making these payment will not reduce or eliminate the student loan debt.
The companies would typically charge a consumer more than $1000 for services that are free through the federal government or the borrower’s student loan servicer. “New Yorkers are already struggling under a mountain of student loan debt,” said Attorney General Underwood. “These companies sought to line their own pockets by taking advantage of students who were simply trying to pay for their education. My office will continue to do everything in our power to protect students – and all New Yorkers – from predatory scammers.”
If you need some relief from your student loan debt, there are avenues available but not through companies like the defendants here. The Department of Education website is a good place to start to find out the student loan options offered. If you need to discuss your debt situation with one of our experience attorneys, please call and set up a free consultation at one of our offices.
Kathryn Davis is an attorney at the Bond & Botes Law Offices in Huntsville and Decatur, Alabama. She holds a Bachelor of Arts from Auburn University, and a Juris Doctorate from Samford University, Cumberland School of Law. She is passionate about utilizing the bankruptcy process to help clients navigate through what is usually some of the lowest points in their lives. Read her full bio here.