Illinois Attorney General files suit Against Debt Settlement Companies related to Student Loan Debt Scams

Yesterday, July 14, 2014, Illinois Attorney General Lisa Madigan filed lawsuits against two debt settlement companies, Broadsword Student Advantage LLC, and the Chicago based First American Tax Defense LLC. The lawsuits center around these companies' deceptive practices concerning student loans, not only charging large upfront fees for help that never arrives but also charging borrowers for government services that are already free of charge. Although Illinois is the first state to bring legal action against such companies and their student loan practices, these lawsuits are indicative of a widespread national issue. In recent years student loan debt has grown to historic levels, resulting in $1.2 trillion dollars in student loan debt in the United States. According to the Consumer Financial Protection Bureau, an estimated seven million Americans have already defaulted on a total of $100 billion, with more and more individuals defaulting each month. The student loan situation creates a vulnerable demographic which companies target through high-pressure sales tactics. By advertising services such as the ability to negotiate lower monthly payments, remove wage garnishments and secure student loan forgiveness, they lure borrowers into paying hundreds of dollars in upfront fees for services they either cannot provide or which are already available to consumers for free through the United States Department of Education. The attorneys at FactorLaw welcome inquiries about student loan issues.
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