(Rolf from Florida) Today I signed a debt settlement agreement on the internet, THEN read about the pitfalls. How can I get out of the agreement before any payments are autmatically withdrawn?Dear Rolf:
Be thankful that you discovered the futility of debt settlement plans before you threw away thousands of dollars on fees. Most of their clients are not so fortunate.
You can cancel the agreement prior to your first payment, which is the best time to do so. Otherwise, you will likely lose your first several payments as fees until you cancel.
Calling the debt settlement company to verbally cancel is not sufficient. You need to provide them with a written request to terminate the contract.
I recommend faxing and then mailing a termination letter to them. You should keep a copy of the letter that you send. Additionally, sending the termination letter via certified U.S. Mail with a return receipt provides you with proof that the letter was delivered and signed for by an authorized representative for the company.
You will need to consult the contract that you signed to make sure that you have met their requirements for termination. They may provide a specific address or some other requirement that you should follow to ensure that they get the message.
Finally, you will likely see a termination fee in the contract. It is common for debt settlement companies to charge a fee of roughly $200-300 if you terminate the contract prior to completion. This fee is usually drawn down from the funds that you have already submitted. Since you have not yet made a payment, they would have to request a separate payment from you.
Well over 90% of debt settlement company clients fail to complete their plans. It is unlikely that the company would vigorously pursue a termination fee from you. If they do, you should consider fighting it.
It is worth mentioning to your bank that you initially approved an automatic payment plan to that company but that you have cancelled their agreement. Your banker can make sure that no unauthorized debits occur.
Now that you have saved yourself from certain failure, you still will need to address your financial situation. I strongly recommend that you pursue credit counseling to evaluate the seriousness of your situation and to determine available options. As is the case with contracting with any company, you should ensure that the credit counseling organization is reputable. The Better Business Bureau is a good place to go to make sure that the organization has a good track record.Tags: cancel debt settlement contract