Using a debt resolution company. Can you still set up payment plans and negotiate yourself?
I basically have made some mistakes with credit cards and I am trying to turn it around! I have signed up in a debt resolution company that is trying to negotiate with my creditors. In the mean time my credit is being hurt dramatically. The debt resolution company has successfully solved one of my credit cards but I recently received a summons to court in the mail for another. This really concerns me!
I want to know what the right thing to do is? Should I deal with my creditor's directly at this point and hope they can set up reasonable payment plans for me? Should I continue to ignore the credit cards and have this debt resolution company help me?
Should I continue to use a debt resolution company? After recieving a summons to court will my creditor still be able to set up payment plans and negotiate if I call them?
When you hire a debt resolution company with the intention of negotiating lower pay off amounts with your existing creditors, you should be prepared for the risks that come with the decision. Settling your credit cards and other bills for less means having to miss payments. The more payments you miss, the closer the risks of being sued for collection.
Another element of debts going into collection, in order to later settle for a significant savings, is the damage to your credit. Your credit score taking a hit is one of the bigger tradeoffs for getting out of debt through settling balances for less. Hopefully, the fact that credit damage would occur, was explained to you by the debt resolution representative that signed you up into their program.
Whether or not you should let things continue on with the company you hired to help negotiate can depend.
Debt resolution companies are often held back by your limitations.
When you prioritize the credit cards and other bills you are going to settle, you want to identify the ones that have a higher likelihood of suing vs the ones you can negotiate the best savings with. You use that information to establish who you will settle with first – the creditor who offers the most savings – so you get the biggest bang for your available dollars, or the one you can get out of the way to avoid court collections. Not all debt resolution service providers will organize your credit cards with that priority, but some do.
Did you talk over any of the timing and strategies of which account would be dealt with first with the company you hired? It is during this type of discussion with a potential customer that I would learn what their limitations are.
You are often limited, in deciding who and when to settle your debts with first, by the amount of money you will have available at the opportune time for negotiating the debt. If I see a scenario where someone has creditors and balances that cannot be settled with inside of a set period of time, I may not accept the customer, and suggest they speak with a bankruptcy attorney instead. But I may also learn details that suggest someone has no other rational alternative than to settle debts one by one, until done, and no matter if several credit card lenders they have are more aggressive with collections.
I can help you better evaluate what next steps to take if I knew the following about your limitations:
Who is it that is using the court to collect? If it is not a creditor, the name of the debt collector?
Who is it that you owe on those remaining accounts, and what are the balances as of today?
When was it you stopped paying on each of the accounts that are not yet resolved?
What state do you live in? I want to establish whether you live in a consumer friendly law state when it comes to extra ordinary collections (like being sued).
What amount of money do you have saved right now to pay settlements that are negotiated? What if you had to come up with more in order to put all this behind you quickly? What amount could you pull together?
Post your answers to those questions in the comment box below.
Setting up or negotiating payments with your creditors after using a resolution company.
The damage to your credit reports is done. Once your credit cards and other bills have gone unpaid long enough to have collections reach the court, your accounts have likely been charged off. Calling creditors to set up payments will often mean getting connected to debt collectors that work for the creditor, or with a collector that may have bought your debt. The most helpful thing for your credit to recover at this point is not payment plans,but getting the accounts to show as paid/resolved, and regardless of whether you paid the full amount, half the balance, or even less.
At this point, the purpose of taking control of the situation would be to stop any additional collections in the courts.
Negotiating payment plans with some debt collectors can work to eliminate lawsuits. But there are times where sending payments will not prevent your account from going to court.
Negotiating and settling your accounts as quickly as possible is the best way to prevent escalated collection activity.
The debt resolution company you hired may not have had any way to prevent that particular creditor or debt collector from suing you. But they may have an established history, and method for dealing with, or buying time from, your remaining creditors or debt collectors.
I can weigh in with better feedback when you post your replies to my above questions.
Anyone looking to hire, or fire, a debt resolution company, or negotiate payments or settlements going forward, is welcome to post questions and details in the comments below for feedback.