We have signed up with a debt consolidation company Clear One Advantage a year ago we are in debt 100k.
What does it mean to be sued by a Navy Federal Credit Union. Can they take our house, cars assets? How should we handle this mess. Should the debt consolidation company step in?
ClearOne Advantage is a debt settlement company. I suspect they enrolled you in a program where you pay them a certain amount each month and they take their fees from that money and “save” part of it for future settlements.
There is a huge difference between a debt consolidation company, like getting a debt consolidation loan from a company like LendingClub.com and a debt settlement company.
When you are working with a debt settlement company you are not making payments to your creditors. You are willingly in default of your contract with the creditor when you do that. The creditor may avail themselves of all remedies under the contract and through the courts. You can be sued, and you will probably lose. In that case your wages could be garnished and a lien placed against your house. This is serious stuff.
In fact Care One Advantage even says so if you hunt for it on their site. Did they explain these consequences to you?
BY SIGNING BELOW, YOU ARE STATING CLEARONE ADVANTAGE HAS EXPLAINED TO YOU, AND YOU UNDERSTAND ALL THE ISSUES BELOW:
1. You are enrolling into a debt settlement program after voluntarily seeking the assistance of ClearOne Advantage. The goal you have set is to negotiate mutually agreeable settlements between you and your creditor(s) for payment of certain unsecured debt(s) described as Enrolled Debts. No specific results can be predicted or guaranteed.
2. You will be responsible for saving sufficient funds that you control to fund debt settlements that ClearOne Advantage will endeavor to negotiate on your behalf. You and only you will be in control of all settlement funds and under no circumstances will ClearOne Advantage have custody or control of the funds you set aside to fund debt settlements.
3. The savings program you have made to reach your debt settlement goal is detailed in your Client Agreement. Summaries of the total settlement amount, monthly savings, and the period needed to reach your goal were prepared based on the goal you selected. Those summaries reflect the minimum amount that we have estimated you will need to save to put yourself in a position to reach your goals. Actual settlement amounts, necessary savings and the period required to reach your goal may vary based on creditors actions and other factors that may affect or prevent the realization of your goals.
4. Most creditors and collectors negotiate with Debt Settlement Service Providers, ClearOne Advantage cannot force the negotiations and cannot force creditors to accept a settlement. ClearOne Advantage does not make regular monthly payments to your creditors. Your creditors may continue collection efforts on delinquent accounts while you are enrolled in a Debt Settlement Program. Such collection efforts can include phone calls and letters to you, charging off the account, sending accounts to collection agencies or attorneys, lawsuits and even garnishments of your wages if a judgment has been obtained. ClearOne Advantage makes no claim that it will be able to stop these collection activities. These activities may continue while ClearOne Advantage is making its best efforts to negotiate your debt.
5. Your Debt Settlement Program assumes an effort that will continue for many months. The time needed to produce a settlement depends on a number of factors. These may include: (a) your financial hardship, (b) the age and balance of the accounts that you owe your creditors, and (c) the funds you have available to pay for a settlement; and (d) the willingness of individual creditors to enter into debt settlement negotiations. While no guarantees can be given, generally the quicker you save money the sooner you will be in a position to reach your goals. Increased savings will provide you with the option to accept lesser discounts and will also enable you to accumulate funds to reach your debt settlement goals more quickly. However, any settlement must be acceptable to both you and your settling creditor.
6. The fees paid to ClearOne Advantage are intended to compensate them for its efforts and will only be refundable to the extent they have not been deemed to have been earned in the manner described in the Client Agreement. Those fees are not being set aside or held in escrow to fund debt settlements. Fees paid to a Debt Settlement Services Provider such as The Company’s Name for its services will not be available to pay creditors.
7. Communications with creditors are handled on a case by case basis. In some instances creditors may not be contacted until several months after you enroll.
8. You have stated that, because of circumstances beyond your control (hardship), you are unable to meet the minimum payments required by your creditors. If you do not make required minimum payments to your creditors you may be breaking the terms of your agreements with them and your actions will probably be reported to consumer reporting agencies as late, delinquent, charged-off or past due balances. Your creditor may also raise the interest rate on your account and impose other penalties. Your account balance may continue to grow as your creditor adds accrued interest, late fees, over- limit fees and penalties. Your balance may continue to grow until a settlement is reached with your creditor; and, if negotiations are unsuccessful, you could be called upon to pay the entire balance. After settlement your creditor may comment that the account was “settled for less than the full amount” on your credit report. A Debt Settlement Program may have an adverse effect on your credit report and credit score.
9. When your creditor settles your debt, a savings of $600 or more off what you owed may be reported by your creditor to the IRS as Discharge of Indebtedness income. You may wish to consult your tax advisor to determine whether your individual circumstances may permit you to exclude any such Discharge of Indebtedness Income from your reportable income due to insolvency. For more information on tax ramifications to you personally you may also wish to consult a CPA or Tax Attorney and to refer to the IRS website www.irs.gov IRS Publication 908- “Bankruptcy Tax Guide” and IRS Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness available on the IRS website.
10. You acknowledge that the company is not a law firm and cannot provide legal advice.
11. You understand that you have the responsibility and the right to communicate my comments directly to the company’s management using the information provided below:
7125 Thomas Edison Drive, Suite 204
Upon request, you will receive from the Company the refund procedure and grievance policy. Finally, you have a right to report directly any concerns to TASCTM via email: Clientcare@tascsite.org
So, what to do, it is probably going to require you to file bankruptcy to stop the lawsuits and eliminate your debt without further collections or suits. I urge you to click here to find a local bankruptcy attorney you like. Make an appointment and go talk to them.
The debt settlement company is not going to jump in and represent you here and they have said “ClearOne Advantage makes no claim that it will be able to stop these collection activities.” I would bet that was not made really clear when the program was sold to you. Was it?