ameridebt: What You Need to Know

Ameridebt – “Friend of Consumers in Crisis”

When you are struggling with overwhelming debt and make the decision to be proactive and work to rid yourself of financial burden, it is essential that you can turn to someone trustworthy and honest for help. There has been a proliferation in credit counseling and debt resolution services in the United States in recent years. All promise to help you find a way out of your current financial crisis, and many do provide invaluable assistance. Others, however, have tarnished the credit counseling industry and have left people wary.

Ameridebt was a giant in the credit counseling industry: the self-proclaimed nonprofit promised to help consumers lower their monthly payments by consolidating their loans and finding lower interest rates. This was seen as a blessing for people who couldn’t make their monthly payments and were falling further and further behind. What they got in exchange for their payments, however, was far from what they expected.

In 2005, the Federal Trade Commission sued Ameridebt and its founder, Andris Pukke, for deliberately deceiving consumers, hiding fees, failing to educate consumers about debt, and for misrepresenting itself as a nonprofit organization. One of the more egregious misuses of their clients’ trust involved “contributions.”

When clients made their first payments to Ameridebt, they were under the impression they were making their payment to creditors to go towards eliminating their debt. Instead, Ameridebt classified the payment as a contribution and kept the funds. Much of these funds went to a for-profit sister company called DebtWorks and also to finance Pukke’s lavish lifestyle.

Lawyers for Ameridebt tried to argue that the contributions were voluntary. Does it make sense, though, for people who are struggling with debt and struggling to care for their families to make contributions to for-profit organizations? These contributions and hidden fees did even more damage to many Ameridebt clients’ credit and financial state.

The FTC lawsuit sought reimbursement for about 400,000 past and current clients of Ameridebt and eventually reached a settlement wherein Pukke has to relinquish “virtually all of his assets” for a $35 million consumer redress program.

Ameridebt has not only betrayed the trust of its client, it has made people struggling with debt more hesitant to get help from even reputable debt management companies. There are many great services available; it is important that you do a little preliminary research before you choose a service. Here are some things to look for:

• Most debt management agencies work for only a nominal fee. Don’t choose a service that charges high fees or rates. Comparison shop to find the best rates and the best service.
• Education. Make sure the service offers debt management education, both before and during your debt repayment process.
• Some states require debt management services to be licensed. Check to see if your state does and if the service you are considering is licensed. Some are also members of the National Chamber of Commerce and/or their area’s Chamber of Commerce.

Make sure you are getting the very best service possible. If you feel like you have been deceived or treated unfairly, complain immediately. If you cannot get your problem resolved with the company, go to the FTC website for information on where to take your complaints.

When making an effort to relieve your debt and improve your life, you need honest, reliable help. Most credit counseling agencies are trustworthy, but make sure you do a little research before committing to one.