Debt Management Program
We enrolled in a debt management program in Sept. 05. We received an arbitration letter last month and sent it to the debt management contacts. We were then notified that we had 4 days to pay $11,000 for a credit card that had $9,000 on it when we entered the program. We're being held liable for $2,000.00 of debt that accrued because we were following the contracted guidelines of the program. Since we couldnt come up with that kidn of money, we are basically being forced to pay another 500.00 a month with 1,500 down for the next 2 years on top of monthly fee to the program, which depleted our savings.
Yesterday we received a summons for court for another card in the program. The debt management company does not seem to working for us as they are being paid to do. Do we have any options?
1 Answer from Attorneys
Re: Debt Management Program
Debt management agencies ARE NOT LAWYERS. Therefore they are not allowed to represent you in matters where the creditor decides to sue you. These agencies can only try to keep the creditor for suing you by paying the creditor some money as opposed to no money. However since major changes in the bankruptcy code went into effect creditors have gained tremendous power to collect debt and are consequently less and sometimes not willing at all to deal with debt relief agencies. You have to read both the fine and not so fine print of the agreement with the debt management agency. When you read the entire agreement you will read that they really do not guarantee anything and generally with the exception of a few agencies here and there, they are scams. As far as the summonses are concerned you need to get a lawyer because you have a limited amount of time within which to answer the complaint or you will be defaulted (i.e. you will lose without a fight).