Trish Says “Credit Counselor Is Going Out of Business And I’m Late On Payments”

“Dear Steve,

I have been enrolled with a consumer law center that was working with my creditors on my outstanding credit cards. I was late on payments up to 4 months. I was told today that the law center is closing without helping to pay off my creditors. I was making payments to them at $200.00 per month and I have to submit paperwork to try and retrieve my money given to them.

I am back where I started plus 3 more months later. What can I do to pay my cards without the additional late fees and overlimit fees added? Who can i turn to for help?


Dear Trish,

In a perfect world you would be treated as an individual and there would be a human on the other side of the phone at the creditors that could make some allowances for your situation. Unfortunately it is too costly for you to be treated as an individual so instead your situation will fall within one of the mandated policies and procedures from the creditors.

I seriously doubt they will eliminate the fees you were charged. It isn’t their fault that the consumer law center is going out of business. That is really an issue between you and the consumer law center. From the creditor point of view they have been waiting for your payments to bring your account current. They have not been receiving those payments.

You have not given me a bunch of information about your debts so my advice is going to have to be very general.

If your credit card balances are less than $10,000 than maybe a credit counseling or debt management program might be worth investigating to see if it is appropriate for you. If your debt is much larger than that or there is no expectation that you’d be able to keep up with $200 a month payments for the next six years, then bankruptcy would be worth looking at. Get a free bankruptcy review and see if bankruptcy is right for you.

It sounds like your situation is difficult and now that you are seven months behind on the credit cards it might just be too big of a hill for you to climb back over. If that is the case, use the $600 that you will hopefully get back from the consumer law center to help pay for bankruptcy.

Based on what you’ve said it sounds like the consumer law center was actually a debt settlement company where you send a monthly payment, which they accumulate, until they have enough money to approach a creditor about settling the debt for less than you owe. A traditional credit counseling program would have been sending payments to your creditors on a monthly basis.

There is no easy and painless way out of debt. Every option and solution, other than paying your debts in full or at least by the contractual monthly payment will result in some pain. That pain may be a damaged credit report, a lower credit score, fees, penalties, etc.


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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.
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