Soldiers across 13 states get $92M in debt relief

Soldiers across 13 states get $92M in debt relief

A settlement in a massive improper lending investigation will provide $92 million in debt relief to 17,800 U.S. soldiers spread across thirteen states.

According to Fox News, New York and 12 other states have come to a court agreement to close down Rome Finance Company, which has also operated as Colfax Capital Corporation and Culver Capital LLC.

The California and Georgia based company was charged with committing deceptive practices that included failing to provide accurate fees and interest rates.  Rome Finance also assisted retailers with inflating prices.  Terms included repayments taken directly from soldiers’ paychecks.

The Atlanta Journal-Constitution reported that the Federal Consumer Financial Protection Bureau participated in the investigation.  Besides New York, the other states involved are Colorado, Delaware, Florida, Georgia, Kentucky, Indiana, Iowa, Massachusetts, Michigan, North Carolina, Tennessee and Vermont.

Military personnel will keep financed merchandise like computers and gaming systems.  Debt forgiveness for more than 550 New York residents amounted to $2.2 million.  Over 1,328 troops in North Carolina were covered for more than $6.8 million.

The settlement covers more than 17,000 service members and other consumers nationwide.  The deal requires that all negative items related to the financing agreements be erased from military consumers’ credit reports.

According to the Atlanta Journal-Constitution, signed settlement documents were filed last month in federal bankruptcy court in California. The lending companies filed for reorganization in 2008 in a case that was converted last year to a liquidation proceeding.

“Rome Finance lured service members in with the promise of instant financing on expensive electronics, then masked the finance charges with inflated prices in marketing materials and later withheld key information on monthly bills,” said Richard Cordray, Director of the Consumer Financial Protection Bureau. “Today, their long run of picking the pockets of our military has come to an ignominious end.”

“Members of our military make so many sacrifices to protect our nation, and they deserve protection from scams and bad deals,” North Carolina State Attorney General Roy Cooper said in a statement as reported by WRAL.  “This settlement cleans the slate for military consumers tricked into bad financing deals on overpriced electronics and sends a strong message to illegal debt lenders.

The settlement also liquidates Rome Finance and bans Colfax, Culver and two of their owners, Ronald Wilson and William Collins, from the consumer lending business.  Jeremy Katz, attorney for the bankruptcy trustee, declined to comment about the announced settlement as the bankruptcy case is not over yet.