Debt Consolidation May Not Help You!!!

Two years ago, I selected one debt consolidation company in the New England area to help my spouse’s and I with our credit card debts. I could not longer pay the hefty monthly fee with the creditor due to losing my job as a result of bully boss at work. Since I lost my opportunity to find another job that paid well, I was stuck with taking a lower paying job that resulted in a financial hardship for me. My spouse ended up paying some of my bills and with the birth of our child via adoption we incurred certain expenses beyond our control. In addition, my spouse could not pay the creditor’s high monthly payment as well.  This creditor is awful in working out lower payments with their consumers. I was under the false impression that a debt consolidation would be the answer. Boy, I was wrong in making this poor decision.

The debt consolidation company promised that our debt with the same creditor would be paid off in three years with a negotiated settlement. They said they get the best deals with this creditor based upon their track record with them. We agreed to let them be our power of attorney in handling this credit card account for us.

We were told to pay two payments of $ 656.00 for two months that would cover their service fees. Then we were told how we would pay this amount for the next three years in which 15% of it would come off the total debt owed to pay their monthly processing charges. Since we were naive and stressed, we did not ask them to tell us how much money-15%-would be out of our monthly payments to them. All we were told that the money would go into an account on a monthly basis.

I learned that the debt consolidation company did not provide us with certain warnings or caveats that would have helped us make a better decision to use their services or not.

Here is the list:

1) A red flag went up when they told us to not pay our monthly payments to our creditor anymore. They said to tell the creditor to contact them if they called or sent letters to us. We were not aware that our credit report would be adversely affected by not paying the creditor anymore. If we were told this information, we have reconsidered using their services.

2) They used high pressure tactics to try to settle with their creditor when they made an offer. Unfortunately, due to financial constraints, my spouse and I were not able to come up the additional $ 4,000 on top of what was left in the account to pay off my spouse’s credit card. As a result, a shouting match took place between my husband and the staff and the manager. I ended up being the contact person for both accounts.

3) We found out that the debt consolidation was taking out $ 300.00 out of the $ 656.00 we were paying them for the monthly fee. We were disappointed and realized that they were making money at our expense.

4) I found out in June 2012, that my debt was discharged by the credit card company and sold to an agressive law firm. The debt consolidation company never told me that this action occurred. I happen to find out when I ordered a free credit report online. I confronted the manager at the debt company to ask why I was not notified of this discharge on my credit report. He told me that his company works well with this law firm in negotiating fair settlements with their consumers. He never told me that the law firm can reject their offer and still sue me. Again, if I had known this, I would have reconsidered my decision to use their services.

5) After the debt consolidation company paid off my spouse’s debt that was 30% of the balance, we asked them to lower the monthly payments to pay off my debt due to financial constraints. They refused. I fired them and went to the consumer credit counseling service instead.

I fired a complaint with the State’s Attorney General’s (AG) office regarding the debt company’s deceptive practices. Unfortunately, due to an unauthorized debit withdrawal from my spouse’s bank account, I needed to call the manager to straighten this error out. The manager harassed me to no end regarding the complaint to the AG’s office. He said, I was “defaming his company” after he helped us pay off one of our debts. The manager said he could not lower the payments to pay off my debt because it would have taken longer to pay down the debt than originally agreed upon in 2010. I offered the manager some suggestions to warn potential clients of the risks when working with a debt consolidation company. He told me, “you don’t need to tell me how to run my company.”  Also, he went on about the argument that occurred between his staff and my husband that happened a year ago. He then said that this incident occurred more than one time. I said that was not true. I later hung on him as I got tired of him harassing me further.

I contracted with a consumer credit counseling service to pay a lower payment to the lawfirm for my credit card account. Unfortunately,the law firm continued to reject my negotiated monthly payment with the consumer credit service. They threatened to sue me if I did not come up with $ 8,000 in cash as part of a negotiated deal. I said I could not pay the $ 8,000 due to financial constraints. I was out of work again during the summer of 2012 where my spouse was already burdened paying some of my debts.

Recently, the law firm sent me a summons over the balance due on the account. I am negotiations with them to pay down a 25% payment and to continue receiving the negotiated payments from the consumer credit counseling service.

This ordeal is not what I expected. I learned to never trust a debt consolidation company again.

 

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