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I’ve Been in a Debt Settlement Program But Just Got Sued By a Creditor. – John

“Dear Steve,

14 months ago I entered into a credit card settlement company. I have a debt of $8,200.00 and they had told me, in writing, that the debt could be settled for $4,200.00.

Ever since that, I had been making payments of $528.00 per month to this company. They have a 15% fee charge, which they collect right off the bat. Two months ago, the settlement company contacted me and asked if I would like to settle this debt for $3,300.00. Obvisously, I had said yes to that. A few days later, they contacted me again and told me that they would only settle the debt for 80%. Two weeks ago, I was served a civil complaint from this credit card company by the local sherrif.

I don’t know what to do at this point! If I contact the credit card company, they will probably ask for the balance in full. If I do nothing and rely on this debt settlement company, I may be in more trouble than I wish to be in.

Do you have any advise?

Thank You.


Dear John,

If you’ve been sued that’s a serious matter. The first stop should be to call the settlement company and ask them how they plan to handle the situation. If they offer you little advice and you have not received any benefit from their program you may want to ask for a full refund for services you paid for but have not received. You can follow this refund process guide.

At this point with the threat of a lawsuit, probably losing the suit and then having a judgment and possible wage garnishment, you might want to consider bankruptcy. A bankruptcy would kill the lawsuit and let you discharge the debt in a matter of months. If the debt settlement company does not want to give you a refund then the bankruptcy trustee may elect to go after the company and demand the money back. It happens.

You can click here to find a local bankruptcy attorney or if you want a second opinion you can contact Damon Day.

Please update me on your progress by posting updates here in the comments section of your question. I’m very interested in how this works out for you.

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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.

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