Latest Posts
Home > Ask The Get Out of Debt Experts > I’m in a Debt Settlement Program and Getting Sued by My Creditors. – Cathy

I’m in a Debt Settlement Program and Getting Sued by My Creditors. – Cathy

Cathy

“Dear Steve,

We have been with a debt settlement company for about 4 months and one of the unsecured loan outfits is already trying to sue us for the 85% of the total amount plus attorney fees and late charges included for about $500.00 a month or will garnish or lean or property not worth what we owe. Is a debt settlement company really worth having or should a person try doing this on there own.

They offered the company 24% of the total due. Then they asked us if we comply or deny the attorneys offer. What should we do. we do not have the money and we sure cant borrow

Cathy ”

Don’t miss our free Get Out of Debt – “How To” Guide Series on a number of topics, for loads of practical advice, tips, and help to beat back debt. – Click Here

The Answer

 

Dear Cathy,

The reason they are suing you is because they can under law. Being in a debt settlement program, unlike bankruptcy, provides you with absolutely no protection from legal action, judgments, garnishments, collection activity, etc.

My guess is that you are paying the debt settlement monthly. If you check, you will find that your initial payments have been applied to unearned debt settlement fees and that they have little money for you to use to settle these debts. Your creditors have also probably not been getting any payments so they have every right to sue you.

Your choices are limited. You can either face the lawsuit and most likely lose, or you can go talk to a bankruptcy attorney to get legal protection and stop this suit and deal with your debt through the court.

Be sure to read these two previous posts that cover the major issues with debt settlement. Debt settlement gets closed down, and the success rate of debt settlement.

Let me know what you decide to do.

Big Hug!

Im in a Debt Settlement Program and Getting Sued by My Creditors.   Cathy
Get Out of Debt Guy – Twitter, G+, Facebook

I'm in a Debt Settlement Program and Getting Sued by My Creditors. - Cathy by

Share This and Spread the Word

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.
  • http://Website Rangrrob

    To Everyone just go bankrupt.All these debt settlement companies are nothing but scams to take your money.They could give a you know what about you or your situation all their looking for is your money.OVER WHELM THE COURTS WITH SO MANY BANKRUPTCIES THEY WILL HAVE TO BE OPEN SEVEN DAYS A WEEK.

  • Cathy

    I wrote before about being sued by a creditor. Come to relized that back in May I sent the 1st debt collectors
    letter to the debt settlement company and they called the
    Attorney office and the Attorney office asked for a power
    of Attorney from the debt settlement company and it took
    the Attorney office three calls to get them to send them one
    which they finally did July 22, 2009 and then talked to the
    Attorneys office. So we were charged 2 months interest and
    700 dollars attorneys fees, The Attorney office I called myself because I heard from on one at Debt office. And the
    attorneys office said if we did not have a settlement in place by august 7 then they would go ahead with the lawsuit and garnish our wages and lein our property. So we had to come up with 1900.00 down and now make $250 a month payment tto a collection office. I could not get Reliance to return my calls or emails for days. So now I have asked them what they have done with other creditors no answer. They have called on more creditor and got and offer of 1/2 the total 2500.00 with 893.00 a month payment we do not have that kind of money and none in our account. I guess my
    question is did they drop the ball on the collection letter bback in May 2009. Should we stay with them or get our money back and try settleing on our own? The communication with them is awful it is anywhere from a week or longer and they do not answer all your questions. Or now is bankruptcy and good option for us (it would be 2nd time)?
    I feel quilty about that. It was back in 2001 when it was discharged.

    The company is Re-liance out of florida.

    Thank you for your help
    Cathy

    • http://GetOutOfDebt.org Steve Rhode

      Cathy,

      Ironically the company you mentioned, Reliance, claims to be a “Christian based full service Financial debt solutions service’s company.” A company that ironically offers financial solutions that are under question and attack by many states. They claim their services include, “Debt Settlement, Credit Report Repair, Credit Counseling, Foreclosure prevention/Loan Modification and Residential and Commercial mortgage loans.”

      It certainly sounds like you have not received the type of customer service that one would expect. Timely calls and prompt responses should be the norm, not the exception.

      You could try to get your money back, good luck, I suspect a large part of the funds you have paid will have been retained by them as front loaded fees. By the time you get your hands on what money is refundable and contact your creditors, this will only be a bigger mess.

      I stand by my answer to you that I originally gave you above when you first contacted me.

      Steve

  • Cathy

    THANK YOU SO MUCH FOR ANSWERING MY QUESTION. HERE IS ANOTHER
    PROBLEM PRETAINING TO SAME THING. WE THOUGHT OF BANKRUPTCY, BUT ALREADY HAD ONE DISCHARGED IN 2001 AND WE DO NOT KNOW IF WE CAN DO THAT AGAIN WE ARE TRYING TO DO THE RIGHT THING AND PAY SOME OF OUR DEBT, BUT LOOK WHERE THAT GOT US. CAN WE FILE AGAIN OR IS THAT TOTALLY LOOKED DOWN ON?

    THANKS AGAIN

    CATHY

    • http://GetOutOfDebt.org Steve Rhode

      Cathy,

      Chapter 13 bankruptcy is available. The only person who gives a damn and will look down on this is you. In a Chapter 13 bankruptcy you will repay the debt you can afford to pay and that’s what you are trying to do.

      I’m just not sure how paying a debt settlement company $5,000 in fees helps you to “do the right thing.”

      Steve

Get My FREE Get Out of Debt Guy Newsletter

It is the smart thing to do.

I promise to keep your email safe and secure.

Close

I want to keep you posted each weekday with just one email about the latest get out of debt news, scam alerts and information to beat back debt.

You can unsubscribe at any time with just one click.

After you subscribe, check your email to confirm your subscription. If the confirmation email does not appear in your inbox in a few minutes, check your spam folder for it. Sometimes it likes to annoyingly hide there.


  • It will keep you posted on the latest scams.
  • You will be alerted to the latest articles.
  • You will wind up smarter than everyone else dealing with debt.