Can I Sue a Fraudulent Debt Settlement Company?

If you have used a debt settlement organization in order to find debt relief, you are obviously turning to that company for help. What if, however, the debt relief company you’ve obtained services from has been ineffective in helping you handle any amount of the debt you’ve incurred. Unfortunately, this can and does happen. In fact, there has been an increase in lawsuits against debt settlement companies that are found to be fraudulent.

Suing a Fraudulent Debt Settlement Company

The unfortunate truth in these matters is that, in many cases, when a debt settlement company is being sued by its clients for making fraudulent claims, the company files bankruptcy as a means of absolving itself of financial responsibility for the lawsuit. Since the company isn’t able to pay the terms of the lawsuit even in cases where the judgment is in the client’s favor, you may wind up out the money you’ve paid for the company’s services, and still owing your creditors the original debt you sought help for in the first place.  

Determining the Worth of a Lawsuit 

  • If you’re considering filing a lawsuit against a debt consolidation company you’ve found has received payments from you and provided no actual services, you’ll need to weigh out the added cost of entering a courtroom to resolve the issue versus simply cutting your losses and attempting to work out a payment schedule with your creditors yourself.
  • In most cases, the latter is the least stressful option, because of the fact that many people who file a lawsuit against their debt settlement company aren’t successful in receiving compensation for their payments anyway, so they just wind up incurring more cost due to court costs on top of their original debt. 

Choosing a Reputable Debt Settlement Company 

Before you obtain services from any debt settlement company, you want to make sure the company has an established standing with a listing of creditors in order to know that the company does in fact deal directly with them. You’ll also want to look the company name up according to the Better Business Bureau, and find out whether or not any claims have been filed against them company claiming the company to be fraudulent.

Getting Help

In most cases, the best option is to simply avoid a standard debt settlement company entirely. Instead, consider consulting with an experienced attorney who specializes in debt collection. A lawyer can help you in many of the ways a debt settlement company can, but is bound by the ethical code that applies to all lawyers and thus must act in your best interests.

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