DEBT MANAGEMENT AND NEGOTIATION PLANS
You can barely turn on a television or listen to a radio without listening to a catchy jingle about some debt plan that will allow you to get out of debt for a fraction of what you owe. Are these plans legitimate? Do they really work? How do they work?
Characteristics. Debt Management Companies are not specifically defined by statute although there are some laws in this area which will be discussed below. These are the characteristics that I have encountered in dealing with these companies:
When to Sue. These are some suggestions on when to sue a debt management company:
a. Sued on enrolled debt. If you have been sued on an enrolled Debt Management Service account;
b. Arbitration on enrolled debt. If you have been called to arbitration on an enrolled Debt Management Service account;
c. Large fees. No Results. If you have paid significant fees to the Debt Management Service but the DEBT MANAGEMENT SERVICE has not achieved the promised results.
d. Potential Client in Good Financial Standing before contracting with Debt Management Service. This is a more difficult case, but if you were in good standing with your creditors (not in default or at least not in complete default) before contracting with the Debt Management Service, you may have a claim. However, be careful. You may have been overextended with your financial barrel marginally floating in the river. If you were just financially upstream from
The Disclosure. The CREDIT REPAIR ORGANIZATION ACT 15 USC 1679 requires a disclosure:
"Consumer Credit File Rights Under State and Federal Law
"You have a right to dispute inaccurate information in your credit report by contacting the credit bureau directly. However, neither you nor any 'credit repair' company or credit repair organization has the right to have accurate, current, and verifiable information removed from your credit report. The credit bureau must remove accurate, negative information from your report only if it is over 7 years old. Bankruptcy information can be reported for 10 years.
"You have a right to obtain a copy of your credit report from a credit bureau. You may be charged a reasonable fee. There is no fee, however, if you have been turned down for credit, employment, insurance, or a rental dwelling because of information in your credit report within the preceding 60 days. The credit bureau must provide someone to help you interpret the information in your credit file. You are entitled to receive a free copy of your credit report if you are unemployed and intend to apply for employment in the next 60 days, if you are a recipient of public welfare assistance, or if you have reason to believe that there is inaccurate information in your credit report due to fraud.
"You have a right to sue a credit repair organization that violates the Credit Repair Organization Act. This law prohibits deceptive practices by credit repair organizations.
"You have the right to cancel your contract with any credit repair organization for any reason within 3 business days from the date you signed it.
"Credit bureaus are required to follow reasonable procedures to ensure that the information they report is accurate. However, mistakes may occur.
"You may, on your own, notify a credit bureau in writing that you dispute the accuracy of information in your credit file. The credit bureau must then reinvestigate and modify or remove inaccurate or incomplete information. The credit bureau may not charge any fee for this service. Any pertinent information and copies of all documents you have concerning an error should be given to the credit bureau.
"If the credit bureau's reinvestigation does not resolve the dispute to your satisfaction, you may send a brief statement to the credit bureau, to be kept in your file, explaining why you think the record is inaccurate. The credit bureau must include a summary of your statement about disputed information with any report it issues about you.
"The Federal Trade Commission regulates credit bureaus and credit repair organizations. For more information contact:
"The Public Reference Branch
"Federal Trade Commission
15 USC 1679c (a). (emphasis added).
Summary. A Debt Reduction Plan is not easy . It requires a lot of discipline and sacrifice. And one of the things that you want to achieve is an intact credit rating. What will the program do to your credit rating? Almost all wil have some adverse impact. Will it be a minor ding? Or will it make you radioactive to a potential lender for a decade? Is bankruptcy a better alternative? Can I do it myself? If I obtain assistance who should help me?
I offer a debt consultation to explore these options with you. I do charge a fee and I may be able to help you. But I will not try to sell you a Debt Plan or a bankruptcy or ask you to enter into an installment plan. It will just be some good honest analysis and an explanation of some options. Call me for such a consultation.