Student Loan Debt Relief Companies Banned From Industry as Part of Settlement with N.Y. AG

A trio of companies and two individuals have been permanently banned from offering debt relief services nationwide and will repay $250,000 out of a $5.5 million judgment to settle claims brought by the Attorney General of New York that they perpetrated a student loan debt relief scam that cheated thousands of New York student loan borrowers out of millions of dollars.

The settlement, which was submitted Friday in federal court in New York, closes the book on a lawsuit that was originally launched in 2018 against 10 companies and two individuals for tricking individuals into paying $1,000 in fees for services that were offered for free by the Department of Education.

“As New Yorkers continue to struggle financially because of the coronavirus, my office will continue do everything in its power to provide student loan borrowers the support they need and return money to their pockets,” said Letitia James, the Attorney General of New York, in a statement. “We are not only stopping these companies from taking advantage of individuals with false promises of debt relief, but have reached a settlement that provides some monetary relief to eligible borrowers and ensures that no borrower is liable for additional payments to these scammers. My office remains committed to making sure these companies can no longer illegally profit off of those struggling to pay their mounting student loan debt.”

The defendants that most recently settled are Debt Resolve, Inc., Student Loan Care, LLC, and Progress Advocates, LLC, along with Bruce Bellmare and Stanley Freimuth. They, along with the other defendants, were accused of promising loan forgiveness that they could not deliver, claiming an affiliation with the government they did not have, and charging upfront fees illegally and sky-high interest rates that exceeded New York’s State usury cap, according to James’s office.

All total, all of the defendants — which included Equitable Acceptance Corp., Student Advocates, LLC, Student Advocates Team, LLC, Student Loan Support, LLC, Progress Advocates Group, LLC, and Student Advocates Group, LLC, as well as one of their executives, Bradley Jason Hunt — will pay $525,000 in fines and enter into forbearance agreements on $4 million worth of loans.

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