Ask The Get Out of Debt Experts Debt Settlement

We Are in the FBL Associates Debt Settlement Program and Have Just Been Sued. – Kari

“Dear Steve,

We enrolled in a debt settlement program about a year ago, when our credit card payments got to be more than we could handle. On Monday of this week, we were served papers that we were being sued by one of our creditors. I contacted FBL and was told to fax in a copy of the law suit, but the fax number they gave us has been consistently busy for three days. I called again, and was given an e-mail address, but the e-mail was returned as un-deliverable.

Three questions:
1- Should I continue to try to contact FBL, or should I contact the credit card company myself?
2- Should we raid my husband’s 401k to negotiate the debt ourselves?
3- Should I begin the process you talk about to get out of our debt settlement program?

Thanks so much for your help. Just reading this has been a huge relief

Kari”

Dear Kari,

I’d really love to share with you all of the information I have been receiving from people inside the FBL network. Let me sum it up for you. The allegations made by these insiders, that are disgusted with their jobs and many are ashamed at having sold people, including friends and family, into the program because the same thing that is happened to you has happened to many others.

It clearly appears that FBL has switched focus and has now gone from selling debt settlement to selling bankruptcy services. And I would be that if you could get FBL to look at your situation they would say something like what insiders are telling me, “If they are lucky enough to get someone on the phone anymore, they instantly are talking to a salesman who will tell them that they have no other choice but to file bankruptcy which FBL conveniently now does. They will say “you have enough money in your reserves to pay for it, and its your only option.”

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The reality is that being sued was always a possible outcome of participating in a long-term debt settlement program. They just might now have been open in explaining that to you.

So now you are being sued and that tells me the debt is significantly past due along with your others because once you enrolled in the program your funds were directed as FBL told you to and not sent to the creditors as you were contractually obligated to do. The reality is you broke the contract by not making the minimum payments and the creditor has the right to enforce their rights you mutually agreed to when you entered into the agreement.

At this point you need revaluate your entire approach. If you want to get out of this situation, protect yourself legally, preserve your retirement funds and start moving forward with your life you need to strongly consider bankruptcy. Even if you have a strong knee-jerk reaction to bankruptcy you absolutely must meet with a local bankruptcy attorney and get the facts what bankruptcy will mean for you. It’s probably something you should have done to begin with if you had not be fancily sold a debt solution that was never going to work out for you anyway.

Bankruptcy will keep the retirement funds where they are now, will stop all collections, will stop any lawsuits, will eliminate your debt in a short period of time and will give you the best chance of moving forward with your life.

Go talk to a bankruptcy attorney and update me with how you feel after meeting with them by posting your information in the comments below. Let’s do that first before you either react to this one creditor without solving the overall problem or raid your 401(k) unnecessarily.

You can click here to find a local bankruptcy attorney and if you’d like a second opinion about your situation or a personal consultation by another debt coach, please feel free to contact Damon Day.

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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.

Sincerly,
Steve

You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.




About the author

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.

6 Comments

  • Absolutely do NOT raid your 401k to pay the debt. Big mistake. It is completely exempt. And if you take it out, there may be penalties and income tax consequences which could put you further in the hole.

    Speak to a bankruptcy attorney even if you don’t think you would ever file.

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