bjann_2 asked:
I have recently been introducted to a debt reduction program- which sounds to good to be true. I need some advise.
This program is where i stop paying my bills in order to get the credit card companies to settle. In the mean time, I am setting money away into an account known only to me. When enough money is set aside the Debt reduction company will try and settle with my creditors.
Are there any legal consequences I should be aware of?
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this will ruiin your credit. if you wait to long before settling the account, they can take legal action against you.
That sounds very shady. It does make sense to me to have your accounts fall delinquent only to pay them again.
Try this site, they have centers set up to where you can talk to someone in person. They have one at my local YMCA and they seem pretty knowledgable.
I’m afraid I don’t have very much experience with this, and when I tried googling a solution I got back a lot of ads for debt elimination programs. But I found this article (in the link below) and I hope it helps to shed a little light on your situation. Best of luck to you.
You are required to pay the credit card companies per the agreement that came with the card. The only time you are allowed to not pay a credit card company is using a federal “withholding law” (Fair Credit Billing Act, 15 United States Code sections 1666 and 1666i, and Federal Reserve Regulation Z, 12 Code of Federal Regulations sections 226.12(c)and 226.13), which means that you purchased some consumer product or service and it didn’t come as you expected. You must first try to resolve the dispute directly with the seller, if you can’t resolve it, then you must inform the credit card company in writing that you are withholding payment due because of the problem.
The best bet is to pay your credit card bills. If you own your own home, you may want to look into an equity loan to pay them off (I’m pretty sure the loan is tax-deductible up to $100K). If you don’t they will send them to a collection agency, your credit will be ruined, all in the hopes that a debt reduction program will be able to settle with the collection agency.
This one line in your question already gives you the answer. “….the Debt reduction company will try and settle with my creditors…”
You are taking one heck of a risk with this company. Try this….see if they will sign a written guarantee that they will reduce your debt by a certain percent, and there will be no legal obligations or hits adverse effects to your credit.
If they sign such an agreement then you are home free. If not, RUN AWAY!