FREQUENTLY ASKED QUESTIONS REGARDING DEBT RELIEF USA BANKRUPTCY WITH ANSWERS BY THE ATTORNEY GENERAL OF TEXAS - POSTED SEPT 10, 2009
Q: Is Debt Relief USA still in business?
A: On June 18, 2009, Debt Relief USA (the Company) filed for bankruptcy, is no longer in business and is being liquidated by a court-appointed trustee. The Company is no longer able to settle or pay the debts of its clients. The Trustee and his lawyers are working closely with the Texas Attorney General.
Q: What is being done to help consumers in this case?
A: The Texas Attorney General sued Debt Relief USA and alleged that the Company committed false, deceptive, and misleading practices and that the company failed to obtain a license and post a bond as required by law. The Attorney General is asking the Bankruptcy Court for a refund of all set aside funds, fees and other amounts any consumer paid to Debt Relief USA.
Because the Company is in bankruptcy, only the Bankruptcy Court has authority to order those refunds. Thus, the Attorney General has also filed a Proof of Claim in the Bankruptcy Court asking that the Court issue refunds of all monies paid by clients to Debt Relief USA.
Q: Am I going to get all my money back?
A: The Texas Attorney General has filed a Proof of Claim seeking a refund of all monies paid by clients to Debt Relief USA. If you have savings with the company (called “set-aside” funds), most of that money is still there, but not all of it. The Trustee’s accountants are investigating what happened to missing “set-aside” funds. Because of the limited funds held by the Company at the time it filed for bankruptcy, it is unlikely that clients will receive a refund of any other monies paid to the Company -- such as monthly or other administrative fees.
Q: When will I get my money back?
A: That is difficult to say. The Texas Attorney General and the Chapter 7 Trustee are both moving quickly; however legal proceedings take time. Updated information about distribution will be posted on this website.
Q: Does the Texas Attorney General represent me in this bankruptcy?
A: The Texas Attorney General cannot by law serve as your private attorney and represent you individually. He does have authority under the Texas Deceptive Trade Practices Act to seek to recover monies lost by all identifiable consumers and, as explained above, is appearing in the Bankruptcy Court for that purpose.
Q: What is a Proof of Claim (POC)? Do I need to file one?
A: A Proof of Claim is a form that a person who believes that he or she is owed money by a debtor must file with the bankruptcy court. The POC must be signed under penalty of perjury and must have attached to it copies of all documents that you believe show how much money the debtor owes you. You may want to consider filing your own POC and you should feel free to consult with a private attorney about this option. A copy of the Proof of Claim form is available on this website for you to download, print, fill out and mail to the Bankruptcy Court. (Further instructions are on the POC form).
Q: What will happen if I don't file my own Proof of Claim?
A: The Texas Attorney General has filed a POC to recover all amounts consumers paid to Debt Relief USA. The Attorney General's claim seeks payment to consumers based on Debt Relief USA’s business records. If you believe that the company’s records may not be accurate you should file your own separate Proof of Claim.
Q: Do I need to hire a lawyer to file a Proof of Claim?
A: There is no requirement that you hire a lawyer to fill out a POC, but if you have an attorney or wish to hire one to assist you, you may certainly do so.
Q: How do I physically file a Proof of Claim?
A: To file your POC, you should mail the signed original form, copies of all documentation, and a photocopy along with a self addressed, stamped envelope to the following address:
Clerk of U.S. Bankruptcy Court Earle Cabell Building, U.S. Courthouse 1100 Commerce Street, Room 1254 Dallas, Texas 75242-1496
You should include a note asking the court clerk to please file-stamp the original AND to return a file-stamped copy to you in your included selfaddressed, stamped envelope. When you get your filestamped copy back be sure to keep it in a safe place with your other important legal documents.
Q: I’ve received solicitations from other companies -- was my name and address sold to anyone?
A: There has been no sale of your personal information through the bankruptcy case. When the Company first filed bankruptcy, it filed a complete list of all present and former customers with the court and all court records are ordinarily open to the public. Upon learning of this, the Attorney General asked the court to protect your personal information by placing your name and address under seal (meaning it is not available to the general public and it is only available to a very limited number of participants in the bankruptcy case including the Texas Attorney General’s Office and the Trustee).
Q: I am a former customer of Debt Relief USA and they settled my debt. Why am I being given notice of this bankruptcy proceeding?
A: The Attorney General has alleged in its lawsuit that Debt Relief USA did not have valid contracts with consumers, and thus has sought to return to you any fees you were charged during your contract with Debt Relief USA. It is unlikely you will receive any money in the near future, however, as present customers will likely be paid their savings first, in accordance with applicable bankruptcy law.
Q: Can you explain some of the bankruptcy terms?
A: Here are the definitions of some frequently used terms:
Debtor: is the name used to identify the bankrupt entity, which in this case, is Debt Relief USA.
Trustee: means the courtappointed individual who is charged with overseeing the administration of the debtor, finding assets to turn into the case and then paying claims of creditors. The Trustee in this case is Mr. Robert Newhouse.
U. S. Trustee: is the Division of the United States Department of Justice charged with responsibility for overseeing all case trustees (such as Mr. Newhouse) and serving as a watchdog over all matters taking place in all bankruptcy cases.
Chapter: the Bankruptcy Code is published in Volume 11 of United States Statutes Code which has all of the federal laws passed by Congress. Title 11 (dealing with bankruptcy) is divided into chapters (like any book) and Chapter 7 of the Bankruptcy Code deals with liquidations of an entity, as contrasted with a reorganization of the entity in Chapter 11. Debt Relief USA is in a Chapter 7.
Q: If I still have questions, who can I contact for answers?
A: The Attorney General has set up an email and P. O. Box you can write to if you have any additional unanswered questions. You may contact the Texas Attorney General at:
Office of the Texas Attorney General, Consumer Protection and Public Health Division P. O. Box 12548, Austin, Texas 78711
