Should I Speak To My Creditors When Enrolled In A Debt Settlement Program?

    Wow! What a great question, and unfortunately, one which I have not seen addressed in to many articles. The general answer is, it depends on the guidelines given to you by your particular debt settlement law firm or company. When you enroll in a debt settlement program, and hopefully, it is one in which you are represented by legal counsel, that law firm will have its own set of guidelines on how to handle your creditors. The settlement law firm or its customer service arm, will send out letters to each of your creditors advising them that you have enrolled in there settlement program and now represent you concerning these debts. Will this make the creditors stop calling you? Not always. The original creditor can still call you, as they are not bound by the Fair Debt Collection Practices Act. Many times, however, once they learn you have enrolled in a settlement program and are represented by legal counsel, they will stop.
Some will just wait out the one hundred and eighty day charge off period, while continuing to mail you statements and offers to settle, and some will continue to call you.

     After one hundred and eighty days of non payment by you, the account will charge off and either go to an outside collector or there own internal collections department. This is where you are protected by the Fair Debt Collection Practices Act, as the act applies to collection agencies which are not the original creditor, but rather have been assigned the debt or purchased it for less than full value. Often times, the collection company will have received the notification that you are represented by settlement attorneys, but just not bothered to look, or simply chose to ignore it.

     The Fair Debt Collection Practices Act says that collectors cannot call you once they have been notified that you are legally represented. In fact, there is a penalty of $1000.00 per call, if they violate and you can prove it. Unfortunately, I know of clients who have enrolled in excellent debt settlement programs but against the advice of the company continued to take calls from creditors. Unless you have been advised by your settlement company as to how to handle these conversations, it can be disastrous. I know of one client who allowed the collection company to take $200. from her checking account as a one time payment, even though the account was placed with a settlement law firm and she was paying them at the same time. What happened? Generally, there is no one time payment with collection companies. They went into her account each month for four consecutive months before she realized she had paid them $800.00. She actually was angry at the settlement company, even though they had no idea what was happening, because she failed to contact them to get advice before she gave over her checking information.

    Some settlement law firms actually will tell you that they do not want you to speak to creditors enrolled in there program at all. Just let them do the job you hired them for, and call them if you have a question. Some settlement law firms will actually void any warranties they gave you in writing when you enrolled, if you speak directly to your creditors.

   The bottom line is, few people are trained in how to handle creditor phone calls. Thats why you enroll in a debt settlement program. You need to let the experts work on your behalf, because the creditors are trained to use scare tactics, that in many cases are simply not even true.

    If you found this article useful and are not currently a subscriber to our Free Credit Counseling Newsletter, please visit: http://freecreditcounselingblog.typepad.com/creditcounseling/ and sign up for our free feeds from our blog.

Written By:

Steven Ciantro
American Debt Enders
help@americandebtenders.com
Member National Association Of Certified Credit Counselors
877-766-2465