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For Immediate Release
March 22, 2005
Media Contact:
Kevin Enright 410-576-6357

ATTORNEY GENERAL’S OFFICE SETTLES WITH DEBT MANAGEMENT SERVICER


Attorney General J. Joseph Curran, Jr. announced today that his Consumer Protection Division has entered into a settlement with The Ballenger Group, LLC, 321 Ballenger Center Drive, Frederick, and its owner, Ballenger Holdings, LLC. Ballenger Group is a for-profit corporation that provided services in connection with debt management plans. Under a debt management plan, a consumer makes monthly payments to a credit counseling agency that distributes the payments to the consumer’s creditors. In Maryland, only a non-profit corporation can offer and perform debt management plan services.

The Division alleged that Ballenger Group did not act as a mere "processor" for credit counseling agencies but, in fact, actually performed debt management plan services that it cannot legally perform as a for-profit, and accepted fees for those services that it could not legally accept. The Division further alleged that Ballenger Group misrepresented the nature of the debt management plans consumers entered into, including representing that enrolling in a debt management plan would only help consumers’ credit when, in fact, enrolling in a debt management plan can hurt a consumer’s ability to obtain credit. The Division also alleged that Ballenger Group misled consumers into believing that the services it was providing were actually being performed by a non-profit and that the fees consumers paid were being used to support a non-profit. Ballenger denied that it was illegally performing debt management services or misrepresenting its services to consumers.

Under the settlement agreement, Ballenger can only service a debt management plan negotiated by a credit counseling agency and may no longer conduct its own negotiations with consumers’ creditors. The agreement also limits Ballenger’s control over and involvement in the services provided by credit counseling agencies. Ballenger Group further agreed not to misrepresent the impact entering into a debt management plan could have on a consumer’s credit. Ballenger also agreed not to misrepresent its services to consumers or to tell consumers that it is a non-profit. Under the agreement, Ballenger Group will pay restitution of fees it received for debt management services it performed on behalf of Maryland consumers. Ballenger has also agreed to pay the Division $30,000 for its costs.

" Consumers who are struggling with debt should seek counseling from a true non-profit credit counseling agency, which can advise consumers of their options, including whether enrolling in a debt management plan is the right solution," Attorney General Curran said. "Before agreeing to a debt management plan, consumers should compare the fees they are asked to pay with those charged by other credit counseling agencies and they should also be wary of agencies that pressure them into enrolling in debt management plans without explaining all of the available options."



 

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