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We Are With Freedom Financial And Getting Sued. – Anne

“Dear Steve,

I have been with Freedom Financial since early 2011. Have paid $7400 into a settlement acct ($1050 per mo) since May.

I have 8 creditors. FDR has reached a settlement with Advanta and Capital One. I’m not sure when the Advanta Payments will be completed, but the Capital One payments are supposed to be completed April 2012.

We have 6 additional accounts outstanding with a combined balance of $48,000. The remaining creditors are Chase, American Express, Discover, CitiBank, Sears, and another Capital One.

We have now received a summons from a law firm on behalf of American Express for $10,000. We have had no contact with AMEX or the law firm on advice of FDR.

A written response to the summons is due at the end of this week (which FDR does advise we respond). FDR says we don’t have enough money in our account right now to make AMEX an offer (Our settlement account balance shows $732.)

I have called FDR several times to inquire if they have made any contact with Amex or the lawyer and they keep putting me off saying they need more time. I don’t think they have had any contact.

After a couple of years of unemployment, my husband is presently employed. His company provides a business AMEX for company expenses, so AMEX knows all his work info, that he is employed etc. Our other creditors probably don’t have that info in their files since we were self employed for the 5 years prior to 2010.

I am concerned that the path we are on is leading to a pay garnishment, plus we have these other creditors looming out there as well.

I just don’t know what to do, and after reading a bit on your site about FDR I am concerned that the debt settlement approach was not the best idea. What do you advise we do at this point?

The absolute max we could devote to paying off creditors right now would be $2000 per month, and that would be close to a hardship. If my husband loses his job over this, it’s going to feel like the end of the world. Thanks in advance for your help.

Anne”

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The Answer

Dear Anne,

The only debt relief provider that can stop a creditor from suing is a bankruptcy attorney. I must admit that chain of events you’ve given me sounds a bit perplexing. FDR advises you respond but what is the response going to be?

It seems you did have an agreement with American Express and did break that agreement by not making minimum payments. American Express seems to be attempting to enforce their right under the agreement by taking you to court. If you lose it could end in a judgment and even possibly a wage garnishment.

It seems the path you were on was working for you but this suit by AMEX may change everything. It might not even be the last suit you’ll face since you have a number of creditors waiting in the wings.

Before this gets out of hand I would advise you to click here to find a local bankruptcy attorney and meet with them. Only then can you best understand the pros and cons that bankruptcy may mean for you.

I also urge you to get some specific advice from FDR about this suit and ask them what the possible outcomes are if you lose. You need to be well informed so you can make the best decision for you on how to proceed.

I’ll contact FDR and direct them to this post and ask them to comment.

Please post your responses and follow-up messages to me on this in the comments section below.

Big Hug!

We Are With Freedom Financial And Getting Sued.   Anne
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About Steve Rhode

Steve Rhode
Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
  • Anne

    Thought I would post an update since there has been activity on this post.  Freedom was unable to settle the account for us…. the best offer we got through Freedom was a settlement of 70%+ their fee.  Additionally, we would have had to come up with several thousand dollars within a 2 week time frame to execute the settlement prior to a judgement.  We were not able to do this, so we ended up withdrawing the account from FDR and working out a monthly payment arrangement for three years with AMEX on the full balance with no interest.  

    • http://GetOutOfDebt.org Steve Rhode

      Thanks for the update.

    • Guest

      Dear Anne,
      Could you share what the balances were on the Advanta and Capital One accounts were when you enrolled with Freedom Debt Relief and what the balances were at the time the accounts were settled and also what the balances were settled for?
      This would be really helpful for me.

      Thank you.

    • Guest

       Also, are you paying the 21% of enrolled balance fees?

  • Anonymous

    FDR advised me to send in an “Answer to Complaint” form and they made
    clear they cannot tell me what to state in the complaint, but that they
    can tell me what other clients of theirs have stated in similar
    documents.  Along those lines, they suggested the following…. That we
    do not agree with high interest rates.  That we have experienced a
    hardship.  That we have been working with FDR to make every attempt to
    settle out of court.  And that we dispute the $ amount owed. 

    I have called them several times trying to learn about the possible
    outcomes with this and whether or not they have ever had any
    communication with the law firm. They have asked me if I have any extra
    funds available.  They estimated there is a 20% chance it could go to
    court before they could settle…. they said that maybe a court date
    would not be scheduled for many months (I doubt this) and that perhaps
    we’ll have enough funds to make a settlement by then.  They said if a
    judgement is put in against us and a pay garnishment occurs, they would
    still be able to help us settle our other debts :/

    We have received 30-day notices from lawyers working on the CitiBank and
    Discover accounts and I have faxed them both to FDR.  No summons yet, but the 30-day response period is just about up.
    We wanted to avoid bankruptcy. We went the debt settlement route because after being without work for an extended period of time, we were unable to make all our payments on time.  The interest rates were increased so significantly that we could not even afford the minimum payments when we were employed again.  Feel so frustrated as we do want to pay and put this behind us, but we have to be able to pay for housing and food along the way. 
    Is there any point in contacting Amex directly about the situation? -Anne

    • http://GetOutOfDebt.org Steve Rhode

      I should clearly state that since you are being sued, you should consult with an attorney licensed in your state for specific legal advice about your situation.

      Why avoid bankruptcy?

      You can certainly contact AMEX directly. They are your creditor.

      You might get some benefit out of How to Get Out of Debt. The Honest and Unvarnished Truth.

    • http://GetOutOfDebt.org Steve Rhode

      I should clearly state that since you are being sued, you should consult with an attorney licensed in your state for specific legal advice about your situation.

      Why avoid bankruptcy?

      You can certainly contact AMEX directly. They are your creditor.

      You might get some benefit out of How to Get Out of Debt. The Honest and Unvarnished Truth.

      • AnonymousDebtor

         You are an idiot and would compromise Freedom Financial’s efforts.  She is paying for a service, you are attempting to undermind that. Freedom is trying to delay the court process so they may work out a payment plan avoiding execution of judgment.  Once complete funds will build and the account will be settled at a later date, she does not need an attorney and this would not only cost more money for an attorney who can ultimately do nothing, but then Freedom would not be able to contact the law firm suing her anymore.

      • http://GetOutOfDebt.org Steve Rhode

        How do you get that the company is working hard on her behalf when she states they provide her with definitive information. “I have called FDR several times to inquire if they have made any contact with Amex or the lawyer and they keep putting me off saying they need more time. I don’t think they have had any contact.”

        Actually, if you read my answer to her the attorney can put an end to all of this legally, and that’s something.

    • Fitz

      please please please talk to a lawyer in your state who does collection defense work. They are out there and can be of great assistance in determining how to go forward. It will depend a lot on what state you are in and the experience of the lawyer you get. I am in California, but know of an atty in virtually every state that can assist.

      • AnonymousDebtor

        You are an idiot and would compromise Freedom Financial’s efforts.  She is paying for a service, you are attempting to undermind that. Freedom is trying to delay the court process so they may work out a payment plan avoiding execution of judgment.  Once complete funds will build and the account will be settled at a later date, she does not need an attorney and this would not only cost more money for an attorney who can ultimately do nothing, but then Freedom would not be able to contact the law firm suing her anymore.

      • Fitz

        “Freedom is trying to delay the court process”- oops, too late, the process has started. Now that litigation has started, you suggest they do not even talk to a lawyer? Brilliant! I’m not suggesting they hire a lawyer (not near enough facts to know), but don’t talk to one? I’m sure even Freedom encourages consumers get a second opinion on how to proceed when sued……

      • Angelo

        Im defending the strategy, not Freedom…. but by filing the answer template that Freedom gave Ann, it allows more time to accumulate enough money to be able to settle the account.  If Ann did file the answer then Freedom would still be able to negotiate a settlement.  

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