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Should I Contact My Creditors if I'm in a Settlement Plan?

Our debt consolidation company told us to avoid contact with our creditors. Shouldn't we tell them what we are doing?

We are using a debt consolidation company to pay off our credit cards. They tell us to NOT contact them or tell them what we are doing. Is this common? They say we cannot do this for 3 months until they hit collections then they start working for us. We are paying $1000 for four months to the company, then they will start paying our credit cards with the $1000 we deposit every month in our checking account. Are we doing the right thing? The company we are using is Square One.

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Bill's Answer
(4 Votes) | Find Learn Save

Let me get two important disclaimers out of the way before I answer your question.

First, I don't have experience or knowledge of the company you mentioned, and what I am about to write should not be considered either a positive or negative opinion about that company.

Second, I don't know about your financial situation beyond what you included in your question, so I am not commenting either positively or negatively on your strategy.

I can tell you that if you want a debt relief quote from one of our approved providers, you can follow this link:

Debt Relief Savings Quote

Regarding your question, yes, you are being asked to follow a common tactic in avoiding talking to your creditors. Reading between the lines, I'm guessing you were raised by folks who taught you to answer the telephone when it rings, respond to letters mailed to you, and follow the rules of a polite society. Avoiding the entreaties of your creditors strikes you as boorish.

However, here are three reasons you must set aside your instinct for good manners and not talk to your creditors during this time.

First, you hired the debt resolution company to set up a plan for your debt and negotiate with creditors on your behalf. If you contact the creditors without your debt resolution company's knowledge, you may undermine their negotiating tactics and strategy. If you really, really feel you absolutely must talk to a creditor, be sure to contact your debt resolution company first so that they can understand your reasons why you must talk to the creditor, and they can advise you on any consequences this may have for you.

Second, one benefit of working with a debt resolution company is that you do not have to talk to your creditors. You hired the company to negotiate on your behalf. You hired them to make your phone stop ringing at all hours, repeatedly. You hired them to take the heat so that you can focus your mind on your job, your family, and moving your life forward.

Third, if you do speak with a creditor, the first thing they will do is present a parade of horrible consequences if you continue with the debt resolution plan. Some of what they say will be true, and the rest will be exaggerations or dead wrong. Remember that creditors are not your attorney, and any legal advice a creditor offers will be incomplete, incorrect, and self-serving. The reason for their scare tactics is not to assist you, but to maximize the amount of money they can collect from you. That serves their needs, and not necessarily yours.

This may go against your grain, but remember that the credit card companies do not care if you are polite or rude. They do not care how you were raised. They take no offense at your refusal to speak to them. They were not planning to invite you to their executives' wedding showers, anyway. They want your money, which they will get in a few months when your debt resolution company's negotiators call them on your behalf and reach a settlement.

To learn more about debt consolidation, see the Debt Consolidation Services page.

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



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  • BA
    Aug, 2009
    The answer is, "yes." If you have debt, you have an interest expense that's adding up every month. But you need to have a safety cushion for unexpected expenses. Pay down your debt and develop the habit of putting an amount aside each month in savings. Start small. Then when you become debt-free, put the amount you were spending on debt retirement into an interest-bearing savings account and let the miracle of compound interest start to work for you in earnest.
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  • 35x35
    Aug, 2009
    Should I pay down my debt or start saving?
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