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We Went With a Debt Repayment Company and I’m Freaking Out. – Heinz

“Dear Steve,

We have a debt problem and don’t know how to solve it???

We had some debt and went with a debt payment company to get it reduced and pay it off in 36 months.The recession hit and we lost our jobs, and things got really tight. We have 10 months left to repay it and we have taken out a pension fund to pay most of it off. We are just waiting for the paperwork to come to draw it out. We were assured from the debt company, we wont get sued etc.

However we are receiving a package apparently from a lawyer about the debt. We thought we were doing the right thing before but now i am freaking out about it all. I am starting a new job this week and my husband is laid off and just had surgery on both knees. It has been hard.

In the next ten months we would have it all paid off, using the fund , however if they are suing us now…what then??? Bankruptcy?? We don’t have the money now to pay it due to the recession…..??? But we will when the fund comes in. In addition, we paid the debt company a lot of money and if it doesnt work out it was all for nothing…..Please help us!!!


Dear Heinz,

It sounds like you are in a debt settlement program. You can be sued and you will lose. The fact is you are not paying your debts and the creditor can exercise their legal rights under your contract with them to seek legal intervention to collect what is owed them.

I have written a lot about taking pension funds out to pay off debt. Your case is a classic example of why it is a horrible idea. So you take the pension funds out, you pay the taxes and penalties, you lose the growth potential for that money, and then what? You can still be sued.

Before you take any of that money out, I beg you to click here to find a local bankruptcy attorney. The irony is that it is often quicker to recover from bankruptcy and rebuild your credit than it is to have a string of delinquent debts, lawsuits and judgments.

You should be angry, it sounds like the debt settlement company was not entirely honest with you and they certainly did not make it clear that the solution you are in would not shield you from lawsuits.

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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.
  • Heinz

    I emailed you before about my situation. We have pretty much acccepted that we will have to go bankrupt being as three of the five accounts have gone to the lawyers now. We are waiting forpaperwork now. I wanted to know what can they take?? We dont really own anything!! Our house is free for us to live in. We just pay utilities. We dont own our vehicle .It is financed..We have two years left on it to pay. All we own is our house stuff inside. So what will happen with that?? Also my adult kids live at home still. So they wont be able to take their stuff??? Also the truck?? will it have to go back?? I have so many questions regarding all of this and how it works. Should we wait til all the accounts go to the lawyers?? I called the debt company and they dont call me back now..surprising eh?? She told me that they had only had 1 client ever get sued. What now? And when would the calls stop coming?? How long will it take to quieten down after declaring being bankrupt? and how much can we expect to pay?? Are you tired of me yet??:) I just wish it was all over with but the big thing is the stigma of actually going broke. My and his family will be shocked Im sure…Thank you for your help!! I will no doubt need more yet….

    I know I asked soo many question about how to progress from here but I am really stressed about doing it and getting it over with.

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