Posted Jul 14, 2014 08:45 pm CDT
Lawsuits filed Monday by the Illinois attorney general over what she described as student-loan debt-settlement “scams” are said to be the first such suits to be filed by any state.
Lisa Madigan sued Broadsword Student Advantage in Champaign County Circuit Court and First American Tax Defense in Cook County Circuit Court. She alleges that the companies charged borrowers as much as $1,200 upfront for minimal help dealing with student loan debt, often misrepresenting both their fees and their ability to provide meaningful relief to borrowers, according to the Chicago Tribune and the DealBook blog of the New York Times (reg. req.).
First American Tax, for example, advertises that it can remove wage garnishments and help borrowers get out of default when the company actually does little more than help borrowers fill out federal forms, Madigan contends.
The companies couldn’t immediately be reached for comment, the Tribune says.
As the foreclosure crisis dials down, companies that took advantage of struggling mortgage borrowers are now reconfiguring their efforts to focus on individuals having a hard time with student loan debt, DealBook reports.
A press release by Madigan’s office provides further details.