In 1967, the Hawaii State Legislature made “for-profit” debt settlement illegal in Hawaii. The legislature explained that prohibition is the only feasible way to control the abuses of debt settlors. A usual sequence of events is that either the creditors, or some of them, fail to accept the plan or the debtor finds it impossible to live with; and as a consequence, the only thing the debtor gains is the additional debt incurred by virtue of the fee payable to the debt settlement company.
The debt settlement company promises nothing; whereas the debtor unconditionally becomes obligated to pay a fee to the settlement company. The legislature explained that debt settlement or negotiation intrinsically involves the practice of law and no one can effectively represent a debtor badgered by creditors without performing functions constituting the practice of law like making legal determinations of: a) contract validity; b) propriety of interest charges and credits; c) Compromise of debts; d) exemptions, etc…
That is why only licensed attorneys in Hawaii or Non-profit companies can represent Hawaii residents in debt settlement matters.
Haw. Rev. Stat. § 446 provides: “Any person who acts or offers to act as a debt adjuster in this State shall be fined not more than $500 or imprisoned not more than six months, or both. Any contract for debt adjusting entered into with a person engaged in the business for a profit shall be void and unenforceable and the debtor may recover from the debt adjuster all sums or things deposited with the debt adjuster and not disbursed to the debtor’s creditors.” A few exceptions exist such as Hawaii licensed attorneys and non-profits.
In the event you have engaged a mainland or local Debt Settlement/Negotiation firm or company to work on your behalf and they are operating outside the law, please be aware that you can sue to force a refund of the fees and other amounts, including damages against such outfits. We enlist the help of another attorney and friend of our firm, Justin Brackett, www.realdebtrelief.org, to enforce your rights to a full refund of money that these illegal outfits have taken from you.
Make sure you speak to us, before hiring any debt settlement or negotiation company to represent you.