Don't Waste Your Money: Woman warns of debt consolidation nightm - Toledo News Now, Breaking News, Weather, Sports, Toledo

Don't Waste Your Money: Woman warns of debt consolidation nightmare

Updated:

By John Matarese - bio |email

(WTOL) - If you find yourself deep in debt, and don't see a way out, ads for debt consolidators may look pretty tempting. 

They promise to negotiate down what you owe, and take care of everything. But one woman found out it's not so simple.

Laverne Carr Black found herself in a position many families are in these days: $30,000 in debt, after thousands of dollars of hospital bills. 

So the College Hill, Cincinnati, woman started looking for a debt consolidator to help her, and found one called "NuStart." 

Laverne says NuStart referred her to a "Matthews Law Firm"of Los Angeles, California, which promised to negotiate down her debts. 

She told me "I wanted to put them together, get them to take care of it for me, so the bill collectors wouldn't keep harassing me." 

So she approved Matthews taking $412 a month directly from her checkbook. She thought she was done, and that the firm would take care of her debts. 

Laverne said "they told me to stop paying and stop talking to collectors, and if they called and harassed me to let them know."

But after two years of monthly withdrawals, totaling over $10,000 of payments, Laverne claims Matthews paid only one $1,200 bill. 

She says the hospital, her biggest creditor, keeps calling. She said "they have not paid anything," when it comes to her extensive medical bills. 

So I contacted the company, and President Art Matthews responded with an email promising "a return of all funds due to her" and saying "it was our intention to settle her remaining accounts in the coming months." 

But he says he will refund all money taken from her account that was not yet used to settle bills.

The Better Business Bureau has thousands of complaints about debt consolidators and debt settlers, but says based on complaints, Matthews Law Firm is actually one of the better ones. It has just 21 resolved complaints the past 3 years, while some other companies have hundreds that are unresolved. 

But the BBB advises against debt consolidation and debt settlement firms in general, warning these services:

  • Often charge high fees
  • Can take years to pay off debts, if they ultimately do it
  • Can ruin your credit rating.
  • And may not tell you that you will have to pay income tax on any debt that is settled (It counts astaxable income to the IRS)

Click here for more information about consolidation/settlement from the BBB.

The BBB advises you seek out a non-profit Credit Counseling Service instead (they are in the Yellow Pages), so you don't waste your money.

Watch John Matarese's Don't Waste Your Money reports Monday, Wednesday and Friday on WTOL 11 News at 5.

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