MOUNT VERNON — A local man is alleging that a credit counseling agency failed to pay his creditors as part of his debt management plan, and that now he will be forced to file bankruptcy. The Better Business Bureau is looking into his complaint.
Scott Burden said he initially went to Financial & Debt Management Solutions of Mount Vernon in an attempt to avoid bankruptcy, and because he felt comfortable dealing with a local credit counseling agency. He said he paid a total of $1,678 between August and December 2007, but only about $325 of it actually went to his creditors. In October, he started receiving phone calls that the bills were not being paid.
Burden filed a complaint with the Columbus branch of the Better Business Bureau on Jan. 7. A BBB preliminary report states that Burden alleges “problems with the organization’s payments to creditors and mishandling of related communications, work and funds.” The BBB is seeking more information on Financial & Debt Management Solutions and Burden’s complaint; a BBB representative said there is insufficient information to issue a full report at this time.
Burden said the executive director of Financial & Debt Management Solutions, Gwen Jackson, paid him $892 on Jan. 4, and another $102 on Monday. He said he was promised another $154 in the future, but was told he cannot recover the remaining $200, as the organization charges a $50 a month service fee for its services.
Consumer credit counseling services typically run a debt management plan for debt-ridden borrowers who are bogged down by unsecured debts such as credit card debt. They generally assess the consumer’s finances, and renegotiate interest rates and monthly payments with creditors. Although many of the organizations are non-profits, some charge a fee for their service.
Burden said he doesn’t think he should have to pay a service fee, at least not for the months when the agency failed to pay his creditors. He added that Jackson admitted to him that his debts were not being paid in December, and that the money he received back from her is proof of this failure on the agency’s part.
“I want the community to be aware that they should be very careful [with these kinds of agencies],” Burden said. “You think you’re paying into something to help yourself out of debt. ... In my case, it didn’t happen that way, and for whatever reasons ... I’m being forced into bankruptcy.”
Burden said that not only has the ordeal damaged his credit and forced him into bankruptcy, he calculates that about $695 in overlimit fees and late charges have accrued because payments did not reach creditors.
According to the BBB report, Jackson stated on Monday that the organization is reviewing all accounts and will take further measures to resolve any problems following a meeting of its board of directors scheduled for Jan. 30 and cooperation with law enforcement authorities. The BBB will update the report when further infromation is received.
Joan Coughlin, BBB spokeswoman, said if Financial & Debt Management Solutions fails to report back to the BBB or if the allegations are verified, the company could receive an unsatisfactory reliability report. She said the BBB has contacted the Ohio Attorney General regarding the complaint.
Financial & Debt Management Solutions is not listed among agencies accredited by the The National Federation of Consumer Credit Counseling Agencies.
As of press time, neither Jackson nor the attorney general’s office had returned phone calls seeking comment.
