Judgment rendered against credit agency
CHARLESTON – A defunct credit counseling agency was ordered to pay damages from a complaint filed by the West Virginia attorney general claiming it collected excessive fees.
An order was issued Tuesday by Kanawha County Circuit Court Judge James C. Stucky against Family Credit Counseling Corp. and North Carolina-based businessman James R. Armstrong to pay a summary judgment of $126,085 for collecting excessive fees from West Virginia customers.
Stucky’s ruling stems from a complaint alleging Armstrong owned and operated several for-profit companies that solicited consumers to enroll in debt management plans that were administered by the organization, a non-profit company Armstrong also owned, Attorney General Patrick Morrisey said. In a debt management plan, a non-profit company works with a consumer and his or her creditors to negotiate a payment system in order to repay credit card debt.
“The type of service offered by debt-relief and credit counseling agencies typically is very beneficial to consumers who want to pay off their credit cards but may need a little more time to do so,” Morrisey said. “However, in this case, many West Virginia residents did not receive the services as promised. We will take firm action against businesses that take advantage of residents trying to do the right thing.”
Debt management plans, credit counseling and other services are regulated by the state’s debt pooling statute, which prohibits upfront fees and limits monthly service fees for non-profit agencies to 7 percent of the monthly payment amount. The ruling states Armstrong and the corporation overcharged 250 customers in West Virginia $95,737 in upfront fees and $30,348.22 in monthly service fees.