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Can I Enroll in a DMP If I’m Being Sued?

Dear Jeff,
A debt collector is seeking court action. Is it too late to go through debt consolidation? If so, then what else can I do?
Debbie G.

London, Ontario


Debbie,

Always keep in mind that enrolling in a debt management program means that a trained credit counselling team is acting and working on your behalf in negotiating with your creditors. Essentially, you can’t enroll in the program unless your creditors agree to the adjusted payment schedule you set up with your credit counsellor. In general, creditors agree to an adjusted payment schedule for two reasons:

  1. Receiving any payments on the debt you owe is better than nothing. In other words, the creditor would rather recoup what they’re owed, even if the interest rate is reduced during the negotiation process.
  2. Creditors have established relationships with credit counselling agencies that have a proven record of success in debt eliminationThe creditors trust these programs will work, because they’ve worked in so many other situations in the past.

Still, everything comes down to negotiation. The program works if your creditors agree to the terms you set out with the credit counsellor. The counsellor helps you develop a customized plan that works for your budget. However, your creditors must agree to the terms before you can move forward.

A credit counselling agency can try negotiating on your behalf in several situations. They can negotiate with the original creditor, debt collection agencies, and medical debt collectors. Even in cases like this where the enrollee is potentially being sued already over the debt.

In some cases, enrollment in the program may satisfy the collector so they withdraw the lawsuit.  The whole reason they’re taking you to court is to force you to repay the debt you owe. If you agree to follow the terms of your debt management program to pay them back, it may not be worth the time and money to take you to court.

That’s not to say that a debt management program will always take care of suits over debt – again, it’s up to the individual debt collector in question and what happens during negotiation. On the other hand, it’s worth a shot to see if you can satisfy the collector by planning to pay what you owe before you see them in court.


Yes, you can. But not always. Once you involve the courts, it can get very confusing. Let’s try to unravel it in three moves…

 

First, you need to understand that while YOU can enroll in a debt management program, your creditors don’t have to. While Consolidated Credit has excellent relationships with major creditors, your personal circumstances can decide if your creditors want to participate with you in a DMP.

 

Sometimes, I’ve seen creditors who are so happy their debtors are in a DMP, they actually withdraw their lawsuit! Why would they do that? Because they don’t WANT to go to court. They just want their money. Enrolling in a DMP is a proven way to pay off your debts, so creditors are willing to give you another chance.

 

Finally, the agency that’s helping you with the DMP is sometimes as important as the DMP itself. In other words, an agency like Consolidated Credit can negotiate with more creditors than, say, a brand-new agency that hasn’t been doing this for years and doesn’t have the same excellent reputation. That matters when it comes to negotiating with creditors so they agree to join you in your DMP. In other words, the “who” matters as much as the “what.”

If you’re already being sued or think you might be, don’t wait around for a court date. Call Consolidated Credit and possibly stop the legal action before it goes too far or even gets started.

Featured Video:

Can I Enroll in a DMP if I’m Being Sued?

The short answer is Yes. However there’s a lot to take into consideration. Jeff Schwartz our Executive Director at Consolidated Credit Canada breaks down your options.



Best of luck,

Jeffrey Schwartz
Executive Director

Jeffrey Schwartz is the Executive Director of Consolidated Credit Canada and President of the Credit Association of Greater Toronto (CAGT).

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