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Debt Consolidation Lawsuit

I am enrolled in a debt consolidation plan. I received a summons from one of my creditors. What do I do?

I had a credit card debt and I lost my job. Due to this I went into the debt consolidation program and paying money to the program from my husband's account. Making this arrangement I moved back to my native country for good. Recently my spouse received a summons under my name from the local court for the defaulted amount. Since I am not in the country I am not sure how to handle this. Please let me know.

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Bill's Answer
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  • Creditors will not negotiate on a current account.
  • Consumers in a debt consolidation plan can be sued.
  • Lawsuits against people in debt consolidation plans are rare.

Debt settlement, sometimes called debt consolidation, is the process of negotiating with creditors to reduce the actual principal balance of the debt. In the debt settlement industry, average negotiated settlements are around 50% of principal balance, with lower settlements seen by many consumers. For an overview of your debt relief choices, including debt settlement and CCCS, read Debt Relief Options: Which is right for you? to learn more.

Creditors will not negotiate on a current account. Creditors will negotiate, generally speaking, when an account is charged off. Charge-off occurs 120-180 days after the last payment. To get to the charge-off point, a person enrolled in a debt settlement program will stop making payments on enrolled accounts. In other words, the debtor (the person enrolled in the debt settlement program) defaults on the contract with the creditors.

When a debtor defaults on a credit contract, the creditor has the right to file a lawsuit for breach of contract. Lawsuits against people enrolled in debt settlement programs occur in roughly one in eight or nine instances. Here, unfortunately, you were one of the unlucky eight or nine.


Consult with your debt consolidation service provider and explain the situation. Ask how they will respond. The provider will most likely accelerate its efforts to reach a settlement with the creditor and reach an out-of-court settlement. Ask your spouse to make a copy of the summons and send it to the legal department at your debt consolidation service provider immediately. Stay in touch with your debt consolidation service provider to be informed of the status of the lawsuit.

I hope this information helps you Find. Learn & Save.



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  • 35x35
    Jul, 2010
    A very smart and diplomatic answer. It’s really appreciable and general. ---------
    0 Votes