North Mankato couple fall deeper in debt despite 'helpers'

In case you missed Sunday's Whistleblower column, here it is. To add to the conversation, go to the original story.

Drowning in $70,000 in debt, Steve and Laura Valenta desperately sought help "to get our lives back."

The North Mankato couple turned to Legal Helpers Debt Resolution, which agreed to negotiate with creditors to lower their debts. Over 14 months, they say, they paid the Chicago-based company $12,253, but only had one debt reduced by about $2,600. They say they haven't been able to reach anyone at the company since last November when they found out Legal Helpers was being sued by the Illinois attorney general for consumer fraud.

"Our credit is totally destroyed," said Valenta, 60, who owns a flooring company in North Mankato. "There were red flags all over."

In Illinois, hundreds of consumers were left in worse debt after working with Legal Helpers, according to Illinois Attorney General Lisa Madigan, who sued the company last March after finding evidence it violated state consumer fraud and deceptive businesses laws. Madigan said the company -- run by the law firm Macey, Aleman, Hyslip and Searns -- unlawfully charged upfront fees for services with promises to make them debt-free, but never lowered clients' debt.

Calls and e-mails from Whistleblower to Legal Helpers were not returned. Last March, however, Jason Searns, general counsel and managing partner, told the Chicago Tribune the company had done nothing wrong, and provided legal counsel to clients and debt-management services through a "strategic alliance" with debt-settlement firms.

The Illinois Department of Financial and Professional Regulation also filed a cease-and-desist order last August against Legal Helpers, asking for restitution for 314 clients.

Legal Helpers still operates with offices in 50 states, according to its website. In Minnesota, Legal Helpers has a Roseville office staffed by an attorney, James Agosto. Agosto referred questions to the Chicago office.

The Minnesota Department of Commerce received six complaints about Legal Helpers Debt Resolution in 2010, resulting in refunds totaling $17,542 for five of the six cases. The department said Legal Helpers hasn't responded to two subsequent complaints in 2011 and one so far this year.

In North Mankato, Valenta hasn't yet filed a complaint, but he plans to contact the Illinois and Minnesota attorneys general. He said he regrets not doing research before signing a four-year contract in August 2010 that required monthly payments of $854.99.

Valenta turned to Legal Helpers after the downturn in the economy in 2009 caused his business to drop by half, leaving him with $70,000 in credit card and bank loan debt. Legal Helpers did reduce one of Valenta's 15 debts by 40 percent, he said.

After 14 payments, Valenta said, the couple was still being hounded by credit card companies, one of which started garnishing wages from his wife, a substitute teacher. That's when Valenta said he searched online and saw the legal action in Illinois. He said he stopped writing payments to Legal Helpers and sent the company a letter in February requesting a refund, but hasn't gotten a reply.

In the contract the Valentas signed, Legal Helpers states it makes no guarantees, but will refund a client if the debt isn't reduced by at least 35 percent by the end of the program.

In recent years, the Minnesota attorney general's office has sued six debt settlement companies, but not Legal Helpers, spokesman Ben Wogsland said. The office advises that consumers find a reputable credit counselor by calling LSS Financial Counseling Service at 1-800-777-7419 in the metro or 1-888-577-2227 in outstate Minnesota, or the National Foundation for Credit Counseling at 1-800-388-2227. Complaints against a debt service can be filed with the attorney general or Department of Commerce or, about an individual lawyer, the Lawyers Professional Responsibility Board.