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I Signed Up With Court Mediation Services and Now I’m Being Sued by Citibank. – Susan

“Dear Steve,

Last year, I fell behind on my credit card payments and my minimum monthly payments jumped to an amount I could no longer afford to pay. Out of desperation, I signed up with a credit counseling company about a year ago called Court Mediation Services, it’s a program that assumes your debt and they take over your overdue accounts.

According to the company, they provide “Out of Court Mediations and debt settlement/relief” I am now being sued by the original creditor Citibank and just received a summons last week. I am completely in over my head and really at a loss as to what I should do next. Should I contact a bankruptcy lawyer? I am also concerned that I will not have the necessary funds to cover any lawyer fees. Any advice would be greatly appreciated.

Do you think bankruptcy is the next step I should take?

Susan”

Dear Susan,

Wow, I never imagined that looking into your question would take me so much time. Apparently a lot of people are upset with Brad Daley and Court Mediation Services. Here are some sites for you to read. See Scam.com, DebtConsolidationCare.com, and RipoffReport.com. The DebtFreeDestiny.com site had additional details about the CMS program.

There is more to read out there but here is what I think I’ve learned about the program. CMS, through it’s agents and/or directly enters into an agreement to “trick” the creditors so you don’t have to repay money owed. The customer is charged an agent fee and service fee of up to $5,000.

The company then attempts to break the credit contract by sending a change in terms and conditions attached to a payment to your creditor. They claim that when this check is cashed that it then supersedes the original terms and conditions you signed.

I find the claims and process to be dubious. I remember on one tour of a Capital One payment processing facility, seeing the payments mechanically separated from the envelopes and attached information dropping into a shred bin.

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Terms and conditions can’t be changed unilaterally by you, or your representative. For an agreement to be modified or changed, just like entering a contract, it takes a meeting of the minds between both parties. In this case, you and the creditor. If the creditor does not agree, no modification has taken place.

Do You Have a Question You'd Like Help With? Contact Debt Coach Damon Day. Click here to reach Damon.

When I specifically asked the Capital One payment processing supervisor about the “Payment in Full” comment that people add to checks thinking that eliminates the rest of their debt, he laughed. He said that the courts realize that payment processing is an automated function and that something scribbled on a check that is not read by a human, just doesn’t stand up in court.

I’d love to see a scanned copy of your Court Mediation Services contract. You can upload it to me here.

NOTE: See this post for scanned copy of the CMS agreement that was subsequently upload to me.

From my experience here is what I can offer you as advice. I have never really seen these types of sneaky tricks resolve debt problems. In general what happens is that people wind up paying thousands of dollars for a service that leaves them still getting sued by their creditors, like you are.

I think that if you want to address your debt situation that you may have to turn to the one legally binding and recognized debt solution available in America today, bankruptcy. Contact a local bankruptcy attorney and go talk with them. It won’t cost you anything to go chat with them.

Maybe Court Medication Services will cheerfully refund your fees so you can use it to pay for bankruptcy.

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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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