Debt Relief Company Said We Could Not Sign Agreement Because the Rules Change a Lot. – JDS

“Dear Damon,

Moved to another town and built a home when things were good. Income is not the same as before and use our cc to cover things like insurance auto & home, advance for paying property taxes ( we still have property that we got back from a LC where we use to live).

Used cc for living expenses when income didn’t cover it. My husband now works 50 to 60 hours a week and I was making sure things were paid. Would pay cc and scrape by to cover other expenses, now we have vowed to not use the cc since the first of the year and make sure the house is covered as well as our vehicles that we have one more year to pay on which totals 975 a month.

Home is auto withdrwn at 810 biweekly. Looked into debt mangement back in the fall and really wasn’t bringing enough in to do this, talked with another gentlemen from “Money Mangement International” and he suggested bankruptcy.

Spoke with a bankruptcy attorney over the phone. Husband did not want to go this route you know pride, and what we could possibly loose. Husband went to see a local man who said he specialized in mortgage refi’s and credit card settlement.

Well in March we signed with him and I should have followed my gut instinct. He told us to not pay our cc and send all calls to his office, we paid a upfront fee of 595 and 200 each month until 1995 is paid off. (have paid him 795)

When I did talk with cc companies they say that they do not work with cc settlement companies. I feel like this whole is getting to be a bigger mess. Plus he didn’t have an actual form for us to sign because” they change the rules so often I would be changing it alot” therefore we signed a Service Agreement which is for home loan modifications. He told us our home mortgage is good where its at.

Now I have spoke with BofA and they put me into a FIA but I still have not started that because I really can not afford the 200 a month payment. Total cc debt is approx. 55100.00. with all companies. I’m sick with worry all the time with this and don’t know what to do. If my husband should ever go back to just 40 hours a week we are really in trouble. His total income in 2010 was 68 thousand and mine is about 23.

he drives an hour to work each way and therefore uses alot of gas so that is about 100 week. We feel that if we had just one more year and when the cars are paid for we will be better off, and of course we have the land up 4 sale but that is unlikely to sell in this year.

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Did not want to file bankruptcy and signed an agreement with a man who said he could help with cc settlement. Now I think we have been missed guided and we were up to date on cc pmts until March when he told us to quite paying and start saving. How do we save we are barely getting the home, cars and insurance, propane and other household items paid. Is there anyother way besides bankruptcy. Was robbing Peter to pay Paul and now Peter is out of money.

JDS”

Dear Hello JDS.

The first thing that jumped out at me is

“Plus he didn’t have an actual form for us to sign because they change the rules so often I would be changing it alot therefore we signed a Service Agreement which is for home loan modifications.”

This is an absurd claim and you have an agreement to pay $2,000 upfront for something he is not even going to do. I suspect what he meant to say was he is not allowed to charge you these fees upfront to settle your debt for you. So instead he is pretending you are paying him for a home loan modification. The whole thing sounds shady and illegal.

Now I don’t know anything about this guy and he could very well have good intentions, but if it were me, I would cancel that and demand a refund just on shadiness alone. Something tells me that he will give it back as he does not want any light shined on what he is doing. There is a new law that passed last year, that does not allow a debt settlement company to charge fees for settling debt until a debt is settled. So it seems he may have dreamed up his own little loop hole around that in his mind.

Now to address the bigger problem which is what do you do to resolve your problem. The answer is that I don’t know nearly enough about your finances or your habits at this point to be able to tell you.

What I can say is that you should absolutely meet with a bankruptcy attorney to at least explore that option. You don’t have to file it, just make sure you fully understand how you will be or not be effected by it, so that when you are making a major financial decision like this, you will at least have all of the facts.

Given your income, you may not qualify for a chapter 7 and might be looking at a chapter 13. We have to know exactly how the bankruptcy would look for you and which chapter it will be so we can compare that to the option of moving forward with settlement and make the best and most informed decision for you and your family.

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When you look at settlement, you need to figure that you are going to have to raise, save, or borrow about 25K or so on average to get out of this debt by settling it. My question is realistically is it possible and if so how long would it take? If longer than 12 to 24 months, there is a good chance you will end up in court before this is over.

Debt Settlement is not a simple monthly payment for a few years and you are done. It is not a fun process and before you can say you are prepared to go through it, you will need to understand how bankruptcy will be. In many cases, you might find that bankruptcy is less costly, less stressful, faster, and will give you the quick and clean fresh start you are looking for. I know it is an emotional decision, however, I don’t think your husband is prepared for how he is going to feel if he has the constant threat of a lawsuit hanging over his head for several years to come.

If you and your husband would like to have a detailed conversation about the pros and cons of settlement vs bankruptcy, have me look over your finances and create a specific plan for you guys to move forward with, you may contact me through my website.

Damon is a talented independent debt coach that provides in-depth assistance and consultations for people struggling with debt. If you want a personal debt coach to help you through a difficult situation or want assistance to find secret discounts offered by debt settlement companies I think Damon Day is an excellent person to contact for advice and assistance. He can be reached directly at DamonDay.com

If you have a debt related question you’d like to ask, just use the online form.

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