Do Debt Settlement Company Relationships With Hedge Funds Create a Fiduciary Problem for the Consumer?
April 21, 2010 A new variation of the debt settlement process is appearing, the debt settlement hedge fund. Apparently the way this works is the debt settlement company has a relationship with a related hedge fund or pool of money that they can access to payoff an enrolled clients debt. The issue is if the debt settlement company reaches an agreement with the debtor’s creditor to settle the debt for X but the debt settlement company makes the debtor pay X+a premium. I would imagine that the hedge fund would not payoff the client’s debt unless the client had already saved that amount in their trust account. One company that seems to have a hedge fund relationship is the debt settlement company DebtXS. DebtXS is affiliated with Dextral Capital and their managing partner, Jason Spencer, is quoted as saying “We have an arbitrage distressed debt strategy that utilizes our competitive advantage to generate obscene returns.” – Source. Jason also says, “I manage one of the best performing hedg
