Debt negotiation company...what should I do?
[ Follow Ups ] [ Post Followup ] [ Credit Forum Index ]
Posted by Mark (192.133.17.49) on June 06, 2002 at 16:05:57:
OK here's the situation we got ourselves into. We had $30,000 in CC debt last November, so we signed up with a debt negotiation company to handle our debts. We pay them $475 a month which goes into an account used to pay off settlements as they are reached with our 7 creditors. They sent us cease and desist letters to send to our creditors and this has stopped all the phone calls. Now on Monday, we received a summons from attorneys in Oklahoma City (we are in Tulsa) stating that Citibank has filed a lawsuit against us for $13,100 plus legal fees. We have 35 days to respond in writing to this summons or a judgment will be entered against us. Our DN company advised us to fax them the summons, which we did. They say they will reply to it, and try to settle the debt. I am very worried about this whole process. Interest, late fees, and over-the-limit fees are have driven our total balance up to $35,000 now. Even if the DN company eventually settles our debts, I believe we will end up paying more than our current debt once their fees and the IRS implications are figured in given that the balances continue to go up. We also have a $36,000 balance on a home equity loan at an absurd 17.38 % interest rate...that loan is through Household and I now know all about them...too late I know. The good news is that our income is around $80,000 and I can and now will borrow $43,400 from my 401K. The question I have is this...should I use the money from the 401K to pay off the credit cards? I can then use the leftover money to put towards the home equity loan. Also does the DN company then have to return my money that I have already paid them? If so, I can also apply this money towards the home equity loan. The other option is to pay off more of the home equity loan...a prepayment penalty won't let me pay it all off though for another 2 years while not paying off the entire CC debt. Should I get rid of the DN company regardless? Or should I let them settle the Citibank account before getting rid of them? If I do dump the DN company and pay all the CC debt myself, how will I know whether to pay the original creditor or not? And do I pay the Citibank amount to the attorneys who filed the suit? Thanks for any help!
Follow Ups:
Post a Followup
|
