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Debt settlement company Morgan Drexen is no longer in business: What you should know


Morgan Drexen has gone out of business. If you are a Morgan Drexen customer, you must take action on your debts. You can also request a refund of any money that is currently in your settlement account.

In 2013, we sued debt settlement company Morgan Drexen for collecting illegal “upfront fees” for debt settlement services and for running deceptive advertisements. We prevailed in our lawsuit: in April 2015, a federal court ruled against Morgan Drexen and found that the company misled the court and falsified evidence during the lawsuit. The court later ruled that Morgan Drexen must stop collecting money from its customers. Morgan Drexen went out of business in late June 2015 after filing for bankruptcy.

Next steps for Morgan Drexen customers

Soon you should receive an official letter and an e-mail explaining how you can protect your rights now that Morgan Drexen is no longer in business. This letter will provide you with information about your account and where to pay debts that have not been paid off. The letter will tell you whether you are currently in a settlement payment plan and what you need to do to keep that plan on track. If you are in a settlement payment plan, you must act quickly to avoid losing the terms of your settlement and reduced debt amount.

If you have debts that were not settled, you will need to consider other options to resolve those debts. You can negotiate directly with creditors to try to get a reduced payment plan on your debts. If you are thinking of paying another company for debt settlement services, you should first carefully review your options to avoid illegal upfront fees and other scams.

Requesting a refund

You have the right to request a refund of any money that is currently in your settlement account. Start by contacting the attorney who worked for you on your debts with Morgan Drexen. The attorney will have access to your settlement account. Because your attorney is required to hold your settlement account as a “trust account,” he or she must provide you with a refund of any money in that account.

The amount of money in your settlement (trust) account will likely be less than what you have paid Morgan Drexen because Morgan Drexen charged you upfront fees. Even though the court ruled that these upfront fees are illegal, the court has not yet decided whether it will order Morgan Drexen to return all the fees that were illegally charged to consumers. Since Morgan Drexen filed for bankruptcy, the bankruptcy process will have to run its course before we know if there will be any money left for consumer refunds.

Still have questions?

Morgan Drexen is out of business, but another entity is now running its website. That website is an important source of information for Morgan Drexen’s former customers. Please visit for more information about how to protect your rights. You can also log-in to your Morgan Drexen account to see the status of your debts and payment for your settlements.

Updated on July 29, 2015 as Morgan Drexen will be shutting down completely and their phone number will be disconnected.

We’re ordering JP Morgan Chase to refund $50 million and stop collecting on 528,000 accounts


Today we’re ordering JP Morgan Chase to stop illegal debt collections practices. Along with the Attorneys General in 47 states and the District of Columbia, we found that Chase sold credit card accounts to debt buyers that included amounts that were inaccurate or debts not owed by the consumer. Debt buyers then sought to collect the faulty debts it purchased from Chase. We’re ordering Chase to reform its debt sales practices to prohibit it from selling certain types of debt, like old or disputed debts, and “zombie debt” which are debts that debt collectors repeatedly attempt to collect, even when it’s not collectible. Chase will also have to provide specific documentation to debt buyers when it does sell debts, and must prohibit its debt buyers from re-selling debts they buy from Chase.

Chase also filed more than 528,000 lawsuits against consumers to collect on debts, often using sworn documents that were “robo-signed” and not verified for accuracy. As a result, Chase must refund at least $50 million to consumers, stop collecting on all of these accounts, and include specific information when filing debt collection lawsuits in the future. Chase must also pay $136 million in penalties and payments to the CFPB and states.

Chase has already begun compensating consumers and will contact you if you are eligible for payment. If you have questions about your eligibility for your refund, or to find out if Chase is prohibited from collecting on your account, you can contact Chase.

Debt collection complaints remain high

Of all of the complaints we receive from consumers, debt collection is one of the largest categories.

If you don’t recognize a debt from a debt collector, you have certain rights to verify debt. You can send a letter to the debt collector to request more information. If you have a complaint about debt collection, you can submit a complaint online or by calling us at (855) 411-2372.

We’re suing a robo-call debt collector


Today, we’re announcing that we filed a lawsuit against a robo-call debt collection operation, including its ringleaders, their companies, and service providers. The debt collectors allegedly sent millions of robo-calls to threaten, harass, and deceive consumers to collect debt that consumers do not owe, or were not owed to the debt collectors themselves. The complaint alleges that the scheme depended on the participation of the telemarketing company that sent the robo-calls and the payment processors that allowed the collectors to access consumers’ bank accounts.

Look for warning signs

If you don’t recognize a debt from a debt collector, ask the caller for their name, company, address, telephone number, and professional license number. If a caller is unable to provide you information about his company, or can’t verify information, do not give money to the caller or company. Learn more about warning signs that could signal a debt collection scam.

You have certain rights to ask a debt collector to verify debt. You can send a letter to the debt collector to request more information.

If you have a complaint about debt collection, you can submit a complaint online or by calling us at (855) 411-2372.

Freedom Stores to provide over $2.5 million in refunds and penalties


Today we, along with the Attorneys General of Virginia and North Carolina, announced an enforcement action against a chain of stores doing business outside military bases across the United States. Under the terms of a proposed consent order, Freedom Stores, Inc., Freedom Acceptance Corporation, and Military Credit Services LLC, as well as their owners and chief executives will be required to provide over $2.5 million in consumer redress and penalties for unfair and abusive debt-collection practices, including illegal lawsuits, unauthorized withdrawals from third-party accounts, and calls to servicemembers’ commanding officers.

Our investigation found that the companies illegally filed thousands of lawsuits in Virginia against consumers who didn’t live or purchase goods there: over 3,500 lawsuits in Norfolk, Virginia in two-plus years, almost all resulting in default judgments against consumers, some of whom didn’t even know they’d been sued until they discovered their bank accounts had been garnished.

The companies also buried a clause in the fine print of their contracts that supposedly gave the companies permission to contact the servicemember’s commanding officer. Freedom Acceptance and Military Credit Services then went on to tell servicemember’s chain-of-command about the debts, effectively pressuring the servicemember into paying the companies. These are unfair practices against military personnel, who are afraid of losing rank, pay, or even a security clearance if their commanding officer feels they are not living up to their financial obligations. We’ve heard from a number of servicemembers that they even paid a debt they knew they didn’t owe, just to avoid getting in trouble with their commander.

Like many companies dealing with servicemembers, Freedom Acceptance and Military Credit Services used the military allotment system as a quick and convenient way to get paid. But the companies also required customers to provide them with a back-up payment source in case the allotment didn’t go through for some reason. And if the companies’ allotment processor predicted that a servicemember’s allotment might fail, they went ahead and charged the back-up account without waiting to see if the allotment went through or not. So those servicemembers, when their allotment payment did go through after all, ended up making double payments, without their advance knowledge or consent, leading to overdraft fees, insufficient funds charges and problems paying their other bills.

Additionally, the companies’ debt collectors would sometimes simply take money from checking or credit accounts they had on file of family members or friends who had previously made a payment on the servicemembers’ behalf. These debits were made without notifying the family member or friend or getting consent for the charges – simply taking the cash because the companies had the account access numbers on file from a previous transaction.

We get more complaints about debt collection from servicemembers, veterans and their families than any other issue. This case is a perfect illustration of bad practices that are perpetrated against military personnel who owe a debt.

Our military families deserve better than the treatment they received from Freedom, and I applaud the action taken today by both the CFPB and state authorities to call Freedom Stores and its affiliates and owners to account.

If you are a commanding officer who is receiving calls from someone trying to collect a debt, or a servicemember who is getting threatened or victimized about a debt, we’d like to hear from you. Your complaints can help us spotlight and stop illegal actions like the ones in this case.

Consumer Advisory: 7 ways to keep medical debt in check


Debt collection is the top complaint we’ve received since September 2013. Out of all debt types, medical collections make up 52 percent of collection accounts on credit reports, far outpacing all other types of debt.

Medical collections are so widespread, that an estimated 43 million consumers with an account in collection have medical debt. We analyzed medical collections in our latest report, to explain why medical debt is affecting so many more credit reports than any other type of debt. You can read more about how medical debt hurts your credit report.

Here are steps you can take to keep medical debt in check:

1. Review medical bills carefully

If you don’t recognize the provider, check the date of service to see if you had a medical treatment on that day. For more complicated procedures, ask for an itemized bill from the provider in order to check how much you were charged for each service. Some providers who bill you directly may have been associated with a hospital where you were treated, so you may not have known you were receiving services from them at the time you were being treated.

2. Get documentation

Prepare an organized record of all bills. If you need to dispute a bill, send a written notice to the provider and include a copy of all relevant documents, such as records from doctors’ offices or credit card statements. Do not send original documents.

3. Check your health insurance policy and make sure your provider has your correct insurance info

You should know what your insurance covers, and what it doesn’t – but first your insurance information needs to be up-to-date and accurate! A small mix up can lead to big bills for expenses that your insurance should have covered.

4. Act quickly to resolve or dispute the medical bills that you receive

If you have verified you owe the bill, try to resolve it right away. Verify whether an insurer is paying for all or part of a bill. If you delay the bill and let it end up in collections, it can have a significant impact on your credit score. If you don’t owe the bill, act quickly to dispute it.

5. Negotiate your bill

Hospitals may negotiate the amount of the bill with you. The tab may be reduced if you pay the whole amount up front. You can also try asking for the rate that people who have insurance get. The hospital might also offer a plan that enables you to pay off the debt in installments at no interest. It doesn’t hurt to ask.

6. Get financial assistance or support

Many hospitals have financial assistance programs, which may be called “charity care,” if you are unable to pay your bill. Check the deadlines, which can vary.

7. Don’t put medical bills on your credit card, if you can’t pay it

If you can’t immediately pay off a high debt on your credit card bill, you will be charged high interest, and it will look like regular debt to other creditors. Instead, ask your medical provider for a payment plan with little or no interest.

Related information about debt collection

Check out Ask CFPB to learn more about your debt collection rights and to learn about medical credit cards.

If you’re dealing with debt in general, you can consider finding a reputable credit counseling agency.