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Morgan Drexen - Integrated Legal Systems burns good faith creditors while providing little debtor relief. Anaheim California
Let me share my incounter with Morgan Drexen. After receiving endless daily automated pre-recorded phone calls from Airin Linguard (866-250-3609) advising me she had my "file" and wanted to follow up on a previous conversation regarding debt relief and credit card consolidation with a "pre-approved" $1,000 available. I had never ever talked with any one about these matters at any time.
Making it short, turns out the phone # led to a "boiler room" call center who had no idea who Airin Linguard was, but promptly screened me as to my credit card debt. I was then advised a Franklin Lujan with Morgan Drexen would call me in 10 min. to provide the information I was seeking. More than an hour later Jenifer Rhomberg identifying her self as a "paralegal" with Morgan Drexen called. As a side note, I called the Orange County Paralegal Association in the county Anaheim is located to discover she is not a member and that anyone can call them selves a paralegal regardles of training or employment.
This is how it went. After determining I was in debt approximately $7,000 on two credit cards with interest rates in excess of 20% and I am laied off making only minimum payments she offered a soulution to substantionaly reduce my outstanding debt and payment liability by at least half.
This sounded good to me. So, the next day Federal Express shows up with a fromal contract from the Law office of John Consadene in Media, PA. advising an "Engagement" fee of $918.75 to be collected at the rate of $161. per month held in escrow before settlement payments to my creditors would commence.
OK, it gets better. He wanted attached to a signed contract my voided bank account check with both routing and account #'s for "Automated Check Handling" obligating me to immediate payments on a contract calculated to reduce my debt by $1,204 over 36 months. Bear in mind, this contract was absent the names, acct. #'s or amounts owed to my two credit card companies let alone specific individual settlement figures or any thing else. All I had to do was authorize immediate $161. a month installments.
Examining this contract in detail I would be agreeing to clause 7, "Fees, Costs, and Expenses".
A. Engagement Fee: $918.75 (see above)
B. $10.00 per check handeling fee cut to each debtor monthly.
C. $15.00 fee for any ACH check cancelled by my bank.
D. $45.00 monthly administrative fee.
E. This is the killer. 25% fee of the difference between current amount
owed to creditors and negotiated settlement In my case calculated
to be $7,000 less "anticipated" 1/2 or $3,500 multaplied by .25 equiling
$875.00.
I will spare you doing the math, but here are the net results. Take the paramaters above and work the numbers your self for $7,000.
Side note, item A: This fee lacked explicit explination. A debtor will, in my case, make almost 6 installments befor creditor payments begin. 36 months will transpire when my contract terminates, but creditor are not yet paid in full. What happins then? I live in a Wyoming jurisdiction with a contract governed by the laws of California from a lawyer in Pennsylvania. Oh deer!
B. $ 720. two checks per month for 36 months
C. 0. won't happin
D. 1,620. 45x36=1,620
E. 875. 7,000 (50%x7,000=3,500x25%) = 875
Total $3,215. this would appear per clause 7 to be total fees for 7,000.
3,500. settlement payments to creditors
Total $6,715.
My best numbers indicate creditors would receive $3,500. Morgan Drexen would collect $3,215. My debt would be reduced $285 over 3 years. Not $1,204.
However: Take $161 a month for 36 months and you get $5,796. Reduce this from 7,000 and you do get $1,204 net savings as stated in the contract, but in major variance with the stated "Fee Schedule" in clause 7 of the contract.
What we have now are ultimate discrepencys leading to only two conclusions. The first being the Lawyers option to modify and ammend the contract as provided within clause 20. Doing so allows Morgan Drexen to modify in conformity of the "Fee Schedule" and reduce savings from $1,204 to $285. The other inexcapable conclusion is that creditors will not receive what was setteled for and me the debtor will remain liable.
What Morgan Drexen actually is doing is sucking up a just debt owed to good faith credit extenders from debtors in a economic jamb. Only Morgan Drexen benefits from the plight of a good faith debtor. The creditor looses at least half. Morgan Drexen profits all most the remaining half and the poor debtor reduces their long term debt very little.
This contract is full of all kind of holes and completely uninforceable. But, who wants to get involved in what could be an extended legal battle requiring the debtor to retain their own expensive lawyer. Suffer the hastle with your bank trying to stop authorized withdrawls and then no doubt being attacked by collectors from Morgan Drexen. This is but the "tip of an iceberg wrought with disaster".
Should anyone doubt this experience with Morgan Drexen I will be happy to fax or mail copies of their contract. (((email redacted)))
Plain Tim
Saratoga, Wyoming
U.S.A.
CLICK here to see why Rip-off Report, as a matter of policy, deleted either a phone number, link or e-mail address from this Report.
3 Updates & Rebuttals
J Katz
Anaheim,California,
USA
Morgan Drexen Provides Consumers with Unprecedented Comprehensive Disclosures
#4UPDATE Employee
Thu, December 03, 2009
Morgan Drexen responds to posts because we do not want people relying on inaccurate representations. We prefer disclosing information and responding to concerns so that people reading these posts may make an informed decision.
Morgan Drexen is not a debt management company. Our service helps attorneys negotiate debt settlements. We are not closing down like many debt management companies are, and we do not run away from our clients when they need us.
Since you brought up these issues, here are the answers, Mr. Stoner:
1) You are correct that the customer could have settled his debt alone. However, you fail to recognize that debt management is like preparing a tax return: you can do it yourself, but if you make a mistake it can end up costing you more in time and money than if you had hired someone to do it right the first time. Most clients do not have the knowledge and training needed to settle a debt as effectively as an attorney supported by Morgan Drexen. Further, the program is respected by many creditors; they know that Morgan Drexen has a high record of success and are more willing to work with Morgan Drexen-supported attorneys to achieve settlements fair to both sides.
2) Where did you get the below-500 fact? You claim we ruin clients credit scores for life because they do not pay creditors. Credit scores are not ruined for life; items fall off after a specified number of years. We disclose to clients that their scores may be impacted, but our program is also specifically intended to help people with financial hardship. Most of our clients cannot pay their credit card bills on time every month and already have had their credit impacted. The alternative for them is often bankruptcy, which would hurt their credit score more and stay on longer than a settlement. FICO scores will plummet as much as 240 points if you declare bankruptcy, this according to FICO spokesperson Craig Watts in a recently published article entitled FICO Reveals How Common Credit Mistakes Affect Scores (Yahoo Finance, November 29, 2009). Conversely, theres good news for consumers who choose debt settlement. According to the article, consumers can see as little as a 45 point decline, which ultimately means solid credit may be reestablished easier and faster after debt settlement as opposed to bankruptcy.
3) You asked whether we disclose to clients that the savings is taxable. The answer is yes, we do. The law firms' contracts and our oral disclosures advise that the debt cancellation may constitute taxable income.
4) Your final question was how much in fees Morgan Drexen-supported attorneys charge for the program. Fees depend on the consumers pace of funding the client trust account, but could be as little as 6% of the debt.
I hope this answers your questions and shows that Morgan Drexen is not another fly-by-night debt management company, Mr. Stoner. We would rather clarify speculation than allow false impressions to persist.
StoneyStoner
Morningview,Kentucky,
United States of America
morgan drexen very sketchy
#4Consumer Comment
Sun, November 08, 2009
why is it when someone bad mouth morgan drexen, someone is here in 2 seconds to rebut? Sounds very fishy to me, since multiple DMC's like them are being sued in several states, and some have closed up shop and not answering phones anymore.
and btw, you Morgan d folks 'brag" about going to your site and seeing how much debt you saved someone? you told the part about settling for 25%, good for you!!! I'll put in the part you left out.
1 the customer could have done this
2 you ruined the persons credit for Life because of all the no pays their credit has. they now have a sub 500 score and your done in that part of your life for good
3 you saved the guy 75% in debt!!! another good for you. Did you tell him that the 75% in forgiven debt is taxed by the government????
4. How much did your fee's compare to the money you saved him?
I thought so. Keep getting ripped of by these debtBEAT management companies.
M_Waite
Anaheim,California,
USA
Morgan Drexen and Attorneys Dramatically Help Debtors Who Have A Financial Burden
#4UPDATE Employee
Wed, October 28, 2009
Plain Tims analysis is completely flawed and he, therefore, misses the value of the program offered by the attorneys supported by Morgan Drexen. He fails to realize the impact of interest over the term of the debt which has led the complainant to erroneously calculate the net savings available to a person in his financial position.
Mr. Tim states that he was in debt approximately $7,000 on two credit cards with interest rates in excess of 20% and I am laid off making only minimum payments.
He assumes that, under this scenario, it would cost him $7,000 to extinguish his debt. That is incorrect. Mr. Tim was just laid off and is only making minimum monthly payments. His $7,000 debt does not remain static. Interest continues to accumulate.
If Mr. Tim were to continue to make the minimum monthly payment (assuming an industry average of 4%/month minimum monthly payment), it would take 47 years to pay off the debt. By that time, he would pay a total of $12,000 to the credit card company on the original $7,000 debt ($7,000 in principal and $5,000 in interest). Even assuming that Mr. Tim continues to make the current minimum payment that exists as of the first month ($280), he would pay $10,000 before the debts are extinguished.
By enrolling with an attorney who utilizes Morgan Drexens services, Mr. Tim will be able to pay off his debt in significantly less time at a fraction of the cost of the original debt.
Mr. Tim begrudges that the attorneys contract calls for a term of 36 months with monthly payments of $161. This monthly payment by Mr. Tim is $119 less than the initial minimum monthly payment that he is currently paying to the credit card companies ($7000 x 4%=$280). The qualification for enrolling with an attorney who works with Morgan Drexen is that the client is experiencing financial hardship -- such as Mr. Tims loss of a job and inability to service current debt beyond minimum monthly payments. Due to the hardships the client is facing, the client is able to reduce not only his monthly payment, but also his total outstanding debt. If Mr. Tim were to make the same $161 payments per month directly to his credit card companies, it would take 80 months to pay off his debt. Not only will the complainant be paying less per month, but they will be able to discharge their debt in less than half the time!
Mr. Tim is incorrect in his assertion that the contract is for a term of 36 months. A consumer is not obligated to make payments for 36 months. He could choose to increase the amount of his monthly payments and accelerate the rate of settlement thereby shortening the length of representation by the attorney. His savings would thus be even greater.
We are sorry Mr. Tim was short-sighted in his analysis. We wish him the best in finding new employment and hope he is able to secure debt free status soon during these difficult economic times.