AMERIDEBT TO STOP ENROLLING NEW CUSTOMERS

October 26, 2003

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Morgan King’s Consumer Bankruptcy Letter reports that AmeriDebt will stop enrolling new customers; ‘Negative publicity’ blamed; Service is being sued in two states over fees.

AmeriDebt, the debt counseling service being sued by two states, will stop enrolling clients and focus on its 92,000 customers. This policy is attributed to “negative publicity” about its ability to serve new clients.

AmeriDebt has spent millions of dollars annually on advertising to attract new clients. The company announced it will stop signing up new customers beginning Nov. 1 and suspend its ads on television, radio and the Internet.

The company hasn’t decided whether to close down when all of its clients finish the program, or resume seeking new consumers later, said AmeriDebt lawyer Zynda Sellers.

AmeriDebt employs 50 workers but expects to cut its staff soon to about a dozen, Sellers said. She said she could not comment on whether changes will be made in top management.

The nonprofit will become leaner but will provide a higher level of assistance and education to clients, Sellers said.