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$96 million in debt forgiven in USA Discounter settlement

It is not unusual for consumers in Tennessee to purchase furniture, jewelry or other expensive items on credit. However, that doesn't mean that stores won't use predatory credit and collection practices against consumers. Fortunately, debt relief may be available through various means.

Recently, USA Discounters reached a settlement with 49 states in which the company would forgive as much as $96 million in debt for thousands of consumers, many of whom were current or former service members. In addition, USA Discounters will provide corrections to the credit reports of their consumers and will also provide restitution credits.

USA Discounters sold many different products, including jewelry, electronics, appliances and furniture. Many of these sales were financed on credit with high interest rates. The company specifically sought out current or former service members as customers, with many of the company's stores situated close to military bases.

USA Discounters declared bankruptcy and in the summer of 2015 closed all its store locations. However, it wanted to continue collecting on its finance contracts even though its stores had closed. Ultimately, the States claimed that USA Discounters engaged in practices that were deceptive, false and abusive. This included issuing deceptively usurious loans through false advertising, and then engaging in unlawful collection schemes. In addition, USA Discounters would file lawsuits against service members who were not in the state at the time, resulting in wrongful default judgments against them.

Under the settlement, USA Discounters must write off the balances on all accounts with contracts dating back to June 2012 or earlier. Those with contracts dated after June 2012 will receive a $100 credit. In addition, any judgments that USA Discounters did not obtain in the appropriate state must be written off. USA Discounters must credit any judgments entered into in the correct state against service members a credit equivalent to half of the original amount in the judgment. Finally, USA Discounters must also retract any negative remarks they made on customers' credit reports.

This settlement comes as good news for those who were harmed by USA Discounter's practices. It is important to hold companies like USA Discounter accountable for their misdeeds. Tennessee residents who have questions regarding this settlement, or any other consumer debt problems that they have, may want to discuss their concerns with an attorney.

Source: Military Times, "Company allegedly targeting troops must provide $96 million in debt relief," Karen Jowers, Oct. 1, 2016

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Kenneth C. Rannick, P.C.
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