Some Texas customers of debt relief company Morgan Drexen may be due some financial restitution from the company after a federal district court ruled that it had falsified evidence. However, because the company has gone bankrupt, any payments will happen through the bankruptcy process.
The Consumer Financial Protection Bureau filed a lawsuit against the company in 2013 claiming that the company had charged its customers illegal fees. The CFPB said the company misled customers by having them sign contracts for both bankruptcy and debt relief services even though most customers were only seeking the latter. According to the CFPB, the purpose of the bankruptcy contract was to enable the company to charge customers an advance fee for debt relief work that they were not permitted to charge by federal law.
Prior to the beginning of the 2015 trial, the company falsified bankruptcy petitions that it submitted to the court with the claim that they were evidence of its services. Morgan Drexen was ordered to pay more than $132 million to customers who enrolled in a five-year period between 2010 and 2015. It was also ordered to pay the CFPB’s civil penalty fund $40 million. Penalties of $99 million and $20 million against the company owner as an equitable money judgment and civil money penalty were mostly suspended because the owner could not pay.
People who are struggling with debt might want to discuss their options with an attorney. Illness or job loss may lead to a financial struggle, and bankruptcy might be a good solution for people whose debts exceed their income. There are many misconceptions about bankruptcy that an attorney may be able to clear up. For example, it is possible to rebuild credit following a bankruptcy. A person may be able to keep some property. Filing will also put an end to creditor harassment.