Breaking a Debt Settlement Contract with a Shady Company

A debt settlement contract is like any other legally binding contract. Individuals agree to make specific payments on assigned dates to the debt settlement company. The company collects those payments and then pays the individual’s creditors accordingly. Some take a significant fee for this service. However, there are some companies that are not legitimate and these organizations can leave you wondering how to get out of the agreement.

Is The Contract Binding?

You wanted debt relief when you signed up with the debt settlement company, but most people still take the time to read through the contract provided. In some situations, you and your attorney can prove that the contract is not legally binding. If it was not signed and witnessed by both parties, it may not be binding. If the terms in the contract are illegal in your state, that too can help you to get out of the contract.

What To Do When You Cannot Get Out

In many situations, a debt settlement contract is a legal agreement and can be upheld in a court of law. There are several things you may be able to do, though, to get out of the agreement.

  • Contact the company and request to be removed from the contract. In some cases, this is not a problem for the company, especially in nonprofit organizations.
  • Read through the contract to determine if there are any opportunities for you to get out of it. There may be specific rules in the contract to allow either party to exit the contract.
  • In some situations, you can stop making payments to cancel the contract. However, if you have given the company your bank account information for an automatic withdrawal, this may be difficult unless you close the bank account.

The underlying problem with any of these situations is that the debt settlement company may pursue legal action against you for breaking the contract. If the company feels they can offer you another solution to repaying their debt, they may avoid suing you. However, if you break the contract, the company may file a lawsuit against you. Most reputable companies will not do this.

Hire An Attorney

In nearly all situations in which a consumer feels a debt settlement company is not fulfilling its responsibilities or that the company is in some way misrepresenting them, it is best to hire an attorney to handle your case. The attorney can help determine what legal action you can take against the company or to avoid a lawsuit.

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