I have a total of 4 credit cards and I have fallen behind on one with a large $40,000 balance. After consulting with a credit counseling company, and taking down all the numbers for daily expenses, I was $1400 in the negative at the end of the month.
I told them I have had health problems, haven’t made any money in the last year, my husband is the only income provider and he has had hours cut back. The monthly payment this card company wants me to pay is $1000 with $450 going to interest. I called them to reduce my monthly payments or rate and they denied.
I have spoken with a debt settlement company, Mathy’s Law Group in Woodland Hills, CA. They have asked me to open an escrow fund account under my name to accumulate the funds necessary for negotiations. I have been receiving calls from the credit card company and this makes me uncomfortable having 2 kids in the house.
We have some savings money and considering to use it for this settlement. We also have a paid off car worth about $7000 that 2 people use in the household. I have always been responsible and this is all new to me. Will they negotiate? How do I know that this debt settlement co. is safe to put funds into the trust fund?
Hopefully the law group has asked you to deposit your funds with a third party escrow company like Global Client Solutions or Meracord. These companies have been doing this for a long time. But while the funds you deposit with those companies is your money and under your control you need to evaluate the agreement you signed with the law firm.
Many law firms claim an exemption from the FTC rules that prevent advanced fees being taken for debt settlement services before the debts are settled. If the law firm you are working with is going to take their fees in advance that can put you further behind without any debts settled.
Debt settlement is best suited for people that have funds on hand to settle now or in the next few months. Some people sell assets to fund these settlements. If you have to stop paying your creditors to accumulate money you will certainly wind up in collections and risk being sued and having wages garnished.
Let’s start with the basics.
I’d suggest you first read How to Get Out of Debt. The Honest and Unvarnished Truth and The Truth About The Success Rates, Failure Rates and Completion Rates of Credit Counseling, Debt Settlement, and Bankruptcy. They will give you a great overview of what we need to deal with to get you moving in the right direction.
After that, come back here and comment about what seems to make the most sense and let’s discuss that.
Does that sound like a reasonable approach?
Please post your responses and follow-up messages to me on this in the comments section below.Big Hug!
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