Legal Question in Credit and Debt Law in Utah
I have employed a debt resolution company now what do I do
While trying to refinance our house our mortage broker recommended we try a new service that would ''resolve our debt'' We pay into an escrow account and his company would negotiate with our debtors and resolve our unsecured debts in 3 years while paying a significantly lower amount. That was six months ago. Now I am being served judgements, receiving collections notices etc etc etc. He claims this is normal and only part of the process. In my naivety about the process I hadn't considered the effects this would have on my credit for the long run. Now I am thousands of dollars behind on my unsecured credit accounts and am not sure what to do. Should I continue with the debt resolution firm (I checked the BBB and they had no complaints) or should I look into bankrupcy. There is no way I can now make the payments owing on my debt. Per the company who is supposed to be helping me I have not contacted any of the debtors personally. Do you have any recommendations??? Thanks
2 Answers from Attorneys
Re: I have employed a debt resolution company now what do I do
It does not appear that the debt resolution company did you any favors. The bills are your responsbility, not theirs, and their concern is to take some of the money you would have made in payments as their fee and divvy up the rest. The creditors have not cooperated with the resolution company, and you get the consequences. You may want to consider a suit against the resolution company, depending on what documents you signed.
Whether or not you declare bankruptcy is a function of your income and the amount of unsecured debt. As far as credit goes, the difference between where you are now and if you declare bankruptcy is probably not going to hurt you. Talk to a bankruptcy lawyer about your options before you spend any more money on unsecured debt. Act quickly, since the judgment holders will probably seek garnishment against you.
Re: I have employed a debt resolution company now what do I do
You seem to have put your faith and trust into an organization which is only after your money. What they proposed was to settle your outstanding debt directly with your creditors, something you yourself could do. Setup a fund with regular contributions that you can afford, then contact your creditors and see if you can get them to agree to a small percentage of the fund, regularly. Each undertaking is contingent upon a complete agreement to the plan. That is known as a composition of creditors and can work to give them secure and regular payments. Do not continue on with the company which seems to have screwed up your credit, and charged you to do it.
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