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June 9, 2004


So the suits at AmeriDebt are filing for Chapter 11 bankruptcy protection.

Oh, the irony is downright stifling in this one. Here's a company that promoted itself as the consumers' financial life preserver, so to speak, engaged in the admirable task of aiding cash-strapped families by providing counseling (which they almost never did; it brought in no money) and debt-payment-plan construction (almost always; darn lucrative to the Bottom Line). And now AmeriDebt itself is taking exactly the medicine that it was supposed to help Joe and Jane Consumer avoid — which is to go financially belly-up.

Just how much of Maryland-based AmeriDebt's "consumer aid" package was actually "aid" at all is in serious question, though, and always was. The FTC filed a stiff lawsuit against AmeriDebt late in 2003. This, after scads of AmeriDebt clients came forward to protest AmeriDebt's business practices, which ranged from exorbitant fee-charging to deceptive marketing to downright fraud. It's not like the folks running AmeriDebt were alone, though. A March 2004 article in the Washington Post does a nice job of summarizing the larger situation with credit-counseling companies.

So hold your nose for moment, and let's go back to AmeriDebt. This supposed "nonprofit" organization was anything but. Most research (like Congressional hearings in March of 2004, for instance) suggests that AmeriDebt was set up as a nonprofit entity merely to suck as many debt-loaded people as possible into its debt-management plans, at which time it transferred those clients (and their money) to one of its several subsidiary companies ... which, of course, were geared to turn profits at every opportunity. The brains behind this whole mess? A couple by the name of Andris and Pamela Pukke (I'm not sure of the correct pronunciation of that surname, but I know what it is in my head, and it's appropriate).

Before November of 2003, AmeriDebt was perhaps the most recognized name in the credit-counseling business. They marketed themselves aggressively on cable TV and radio. And with a customer population of somewhere around the 400,000 area, these guys were in a position to absolutely torpedo the already-frail finances of thousands of credit burdened families — which, in many cases, is exactly what they did. So it is truly heartbreaking to see them being forced to seek protection from class-action lawsuits, state and federal lawsuits at every turn, and now bankruptcy.

"The filing in no way will impede AmeriDebt's current operations. AmeriDebt will continue providing credit counseling and debt management services to all of its existing consumers," someone wrote in a recent Yahoo / Newswire story. Boy, is that a load off my mind. For a moment there I thought maybe these chumps would have to close up shop and stop bilking consumers of money they don't have.

AmeriDebt couldn't manage its own business, yet I'm supposed to be relieved that they're still around to help manage mine. Yeah, right. Too bad they're not taking new clients. Otherwise, I'd be sure to sign up right after pouring myself a big cold glass of NOT ON YOUR FRICKIN' LIFE.

Michael | June 9, 2004

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