Alabama A.G. wrongfully shuts down attorney who restructured debts for consumers to banks’ chagrin
The Alabama Attorney General shut down Keith Nalms’ law practice known as Allegro Law. Mr. Nalms, according to the lawsuit filed by the Alabama AG:
The State’s civil complaint alleges that Allegro promoted a risky practice known as debt settlement, in which consumers stop making monthly payments hoping to encourage creditors to write off the debt, reclassify it as less collectible, and agree to settle for a greatly reduced payment. The complaint states that “defendants are attempting to gain this benefit by purposefully and artificially lowering creditors’ assessments of the quality of the customer debt, thereby inducing creditors to accept less to settle accounts. The consequence of this lowered credit standing is a lower credit rating for the consumer, more fees for the service provider, less money to the creditor, and more overall problems for the consumer.”
Attorney General King said, “Alabamians who are suffering hardship and distress during these severe financial times must be protected from exploitation and false solutions that may cause even greater harm. We contend that these defendants were operating a massive scheme that reached across our nation and unscrupulously targeted frightened and desperate consumers. With Alabama’s unemployment rate now at a record 25-year high of 9.8 percent, and many of our people struggling through no fault of their own, this is a particularly contemptible violation, and we will not tolerate it.”
Here is my problem: I hope that there is more to the story than this because in my opinion, Mr. Nalms was doing the right thing for his clients and the AG should not have shut him down. Many consumers who are on the precipice of financial disaster make the minimum monthly payments on their credit cards. The credit card companies love these people because they will be customer for the rest of their lives by making these minimum payments only. If a consumer who has consistently made these monthly payments calls the credit card company to ask for a restructuring of the debt, it is highly unlikely that the credit card company would give the consumer any relief. So, then, how is a hard working Joe supposed to get a break when he is drowning in debt? STOP MAKING THE MINIMUM PAYMENTS TO THE CREDIT CARD COMPANY. Sorry, Mr. A.G., but this is a simple fact of life that no creditor has any incentive to renegotiate a debt with a paying debtor.
Yes, when the consumer stops making the monthly payment, his credit rating will suffer. But most likely, the credit score has already been depressed because the credit cards are maxed out or the consumer has missed some payments here and there. Hence, the consumer’s credit score probably does not have that much further to drop.
I can only guess that the Alabama A.G.’s better funded constituent banks got wind of Mr. Nalm’s practice and strategy and decided to make an example of him. Mr. Nalm’s strategy, again as far as I can see from what is on line, was right on point and he not only did nothing wrong, his thinking was right on point. I hope the Alabama A.G. has some money in reserve somewhere so when Mr. Nalms brings his subsequent lawsuit against the State of Alabama, that they can compensate him and his clients for screwing the attorney and his clients.