I'm Still in Debt Trouble
Posted August 23, 2013
WRAL Reader Question
Several years ago I had nearly maxed out my high interest credit cards, I was making minimum payments, and then had some medical problems that propelled my tailspin.
I sought the services of a consumer credit agency, and I began making monthly payments (over $500/month) to this agency. I continued to accrue late fees, interest, etc. You probably know the story. The credit agency claimed to have sent letters to the credit card companies asking for some relief.
I should add that this agency didn't even have a computer, so there really is no record of the letters beyond a typed copy of a form letter. None of my creditors can confirm receipt of such a letter.
I was served papers by one creditor (which would not have happened had the credit agency paid as I had directed). I terminated my relationship with that agency, and I requested a refund of my money. He replied through his lawyer that (1) I would have to apologize to him in writing (the lawyer is no longer in practice, (2) that I would owe $50/month for stamps, time, etc--which was in my contract but which her verbally said I would not be charged, and (3) that if he dispersed my money it would be to my creditors, not to me.
I have since paid my debts in full by utilizing a similar program recommended by my credit union. That's what I should have done first. I remain debt free, and I am managing my money well, by the way.
The original credit advisory company has more than $2,000 of my money. I contend that my outstanding debt increased exponentially because the agency did not do as it promised. What recourse do I have?
I would like a refund of money as well as reimbursement for what he cause in acting in bad faith, i. e. by not doing as promised my debt increased. When I asked that agency about his professional alliances he said that he was not required to tell me anything.
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I'm sorry you learned a tough lesson and had a bad experience. In the debt world people like that are what I like to call, jerks.
It's not the fact the previous company handled your accounts poorly that got you sued, but that it sounds as if the company was trying to settle or invalidate the debt. Either way both approaches can be problematic and if you are not making your minimum payment to the creditor each month, the creditors may sue you regardless of what the company does.
I wish we would have found each other sooner. There are good solutions when dealing with a bad debt relief company. In fact I even wrote this guide on how to get a refund from a debt relief company.
Today with the new Consumer Financial Protection Bureau and an active Federal Trade Commission there are good enforcement people to file a complaint with. I lay out all the links and contacts in the guide. And of course here in North Carolina we have an exceptional Attorney General office that welcomes consumer complaints.
That all being said, at this point if the company is no longer in business, there is little chance of you getting a refund at this point. Even if you sued the company in small claims court you'd still have to try and collect on it.
The ultimate irony is that while you thought you were doing the right thing back then, if you had gone for the fresh start through bankruptcy it would have cost less than you lost and your debt would have been eliminated in about 90 days. You could have immediately begun to rebuild your credit and used the past several years to get back to saving money for emergencies and retirement.
WRAL Get Out of Debt Guy
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