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Morrisey obtains judgment in credit counseling case

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A North Carolina businessman and his now-defunct credit counseling agency must pay a summary judgment amount of more than $126,000 for unlawful upfront fees and excess charges of monthly service fees.

West Virginia Attorney General Patrick Morrisey filed the action in Kanawha County Circuit Court against James R. Armstrong and Family Credit Counseling along with several for-profit companies that solicited consumers to enroll in debt management plans administered by a nonprofit corporation Armstrong owned.

In a recently-filed order, Kanawha County Circuit Judge James C. Stucky granted summary judgment against Armstrong and Family Credit Counseling Corporation in the amount of $126,085.22— $95,737 for unlawful upfront fees and $30,348.22 in excess charges of monthly service fees.

Stucky also granted a permanent injunction, prohibiting Armstrong and the counseling corporation from doing business of debt pooling or any other debt relief service in West Virginia without obtaining a certificate of authority from the West Virginia Secretary of State.

Court documents state Armstrong and the credit counseling corporation administered debt management plans— which is a plan to repay credit card debt typically negotiated by nonprofit credit counseling agencies — in several states.

Morrisey said these plans are regulated by the state's debt pooling statute, which prohibits upfront fees and limits monthly service fees for non-profit agencies to 7 percent of the monthly payment amount.

Morrisey additionally said this credit counseling corporation overcharged 250 customers in West Virginia in upfront fees and monthly service fees.

"The type of service offered by debt-relief and credit counseling agencies typically is very beneficial to consumers who want to pay off their credit cards but may need a little more time to do so," Morrisey said in his office's news release. "However, in this case, many West Virginia residents did not receive the services as promised. We will take firm action against businesses that take advantage of residents trying to do the right thing."