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Debt settlement companies that may be preying on consumers' financial desperation over credit card debts will need to pull back the curtain and explain what they're really doing to help their customers, under a new investigation launched this week by the office of New York Attorney General Andrew M. Cuomo.
At least 14 companies and one law firm have been subpoenaed in connection with the probe. The subpoenas seek detailed information on the companies' operations, and the impact on customers -- specifically, how the companies' fees for services are set and charged, the number of customers who have actually seen a benefit from the companies' services, and the specific relief being provided to customers, according to a Press Release from the New York AG's Office.
Some of the solutions urged by these debt settlement companies border on the absurd, including suggestions that cash-strapped customers sell their blood plasma, mow lawns in the neighborhood, cut back on the amount of car insurance they're carrying, and seek loans from neighbors and churches, according to Cuomo.
Consumers who are in over their heads where debt is concerned likely have more viable options than these debt settlement companies can provide, Cuomo says: "Many consumers may benefit more from working directly with their creditors, seeking credit counseling, or consulting an attorney about filing for bankruptcy. Additionally, even when enrolled in a debt settlement plan, consumers are often still subjected to collection efforts and lawsuits filed by their creditors."