Debt Consolidation

What To Do To Get Out Of An Unfavorable Debt Management Agreement?

When you hire a credit counselor or a company to manage your debts and to deal with your creditors on your behalf, you have to sign a debt management agreement with them. Though the process itself can be very helpful for those who are unable to handle their debt problems on their own, it is also very important to note these types of debt relief programs do not make a suitable choice for everybody. Besides, you also need to keep in mind that not every debt management company out there makes a right fit. Therefore, it is very much possible that you first sign an agreement for such a program and later you realize you made a bad decision. Following is a brief rundown on some of the options you have when it comes to getting out of an unfavorable agreement for a debt management program.

Is The Company You Have Signed Up With Is A Non-Profit Organization?

If you have signed a debt management agreement with a non-profit company, you have the right to terminate the agreement at any point you like. Agreements with non-profit debt management companies are usually voluntary, which means any of the parties can end the contract at any time. When the contract is terminated, the company must return all your funds that they are holding. Alternatively, you can also ask them to transfer that fund to your creditors toward your debt accounts.

Is It A For-Profit Organization?

If the debt management agreement is with a for-profit organization, you must first read the provisions explained in the contract thoroughly. It is very important for you to understand that the agreement does not become binding until money has exchanged hands and all parties (including your creditors) have accepted the program. In most contracts, there is usually a specific clause that explains the provisions for early termination. In general, just because you have signed this agreement, it does not mean that you are legally obligated to continue using the services of the company. You can always terminate the agreement by paying an early-termination fee. For this, you will have to submit a written termination letter. Do not forget to keep a copy to yourself also for records; you may need it in future in case of any dispute.

While you are ending a debt management agreement, you must also terminate all automated payments immediately.

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