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Q: I’ve heard a lot of negative things about Credit Solutions of America from friends that have tried to consolidate their debt. Is this a bad business or a downright scam?
A: Credit Solutions of America is a debt consolidation company located in Richardson, Texas. Its website is www.creditsolutions.com. It has had several lawsuits and over 1000 complaints with the Better Business Bureau filed against it in the past few years.
These lawsuits and many consumer complaints state that the company has failed to negotiate with creditors as promised, charged outrageous fees, and failed to reduce debts by the amounts promised. In fact, they did little or nothing to lower customers’ debts and charged them for the privilege.
The way it is supposed to work is this. The customer pays 15% of his debt to CSA in monthly installments. CSA instructs him to stop paying on his debts for a period of time and save up the money in a savings account. Then, when the creditors have not received any payments for a while, CSA will negotiate with them to settle for a lesser amount.
Unfortunately, this is not what has happened to many of its customers. When they cease payment, interest keeps adding up, and late fees are tacked on. The creditors may even sue, causing expensive lawsuits. CSA, in the meantime, often does little or none of the negotiating that it promised, and the customer ends up with more debt than they started with and a much lower credit score.