In September 2007, Susie Hulse’s husband died after a long bout with colon cancer.

Hulse found herself in frightening, unfamiliar territory. She’d left her job to care for her husband, Dale. Medical bills from all over the place – hospitals in Wenatchee, Spokane and Tulsa – were piling up. She’d found herself using credit cards to live and to cover co-pays. Her mother developed health problems and moved in with her.

Before she knew it, she was staring at bankruptcy. She owed about $38,000 that she could not pay.

One night, watching television in her Ephrata home, she saw an ad for Freedom Debt Relief. The ad promised that the company would help her get her financial life in order, settle her debts, get back on her feet.

She called right away. She spoke to a guy named Mike.

“I told them the whole sad story, and they were very sympathetic and said don’t worry, we’ll help you,” said Hulse, 59. “I felt so good after I talked to them. I felt like finally somebody understands.”

‘What a racket’

In the state of Washington, it’s against the law to charge more than $25 up front to settle debts. It’s against the law for anyone who settles debts for you to charge more than 15 percent of the amount paid to a creditor.

But Spokane attorney Darrell Scott and his firm have unearthed through a mountain of litigation in the past three years ample evidence that these laws are violated all the time by lots of different companies and individuals. No one in Washington and few people anywhere – in government or private practice – has done as much battle with the debt-settlement industry as Scott and his firm.

The companies Scott pursues follow a similar template: They promise to settle a client’s debt over the course of a three-year program; they have their clients make payments to them, which they say will go into an account for the debt settlement they claim to be negotiating; they emphasize that their client is to stop paying their bills and ignore their creditors, so they’ll have leverage during negotiations; and then they keep most or all of the money in fees, and do little if anything to settle any debts.

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