Typically, debt settlement programs work as follows:
1. You come to an agreement with your debt settlement company in terms of how much they will charge you as a fee- and how much they will ultimately settle your debts for with the credit card companies.
2. You then begin making monthly payments to the debt settlement company which go normally towards their professional fees up front for the first ~ 10 payments. (again, the specifics depend upon your arrangement).
3. During this time, the debt settlement company will normally send letters to your creditors informing them of the arrangement and that you prefer all contact to go directly through the debt settlement company.
4. As soon as you have enough money in your account with the debt settlement company to settle the first credit card account, they will forward those funds to the creditor who then closes out your account as paid in full or settled for "less than full value owed".
The biggest complaint about debt settlement company is that many creditors will begin adverse actions against you (ie: civil lawsuit) in the timespace between initial signup and when you have enough money in the account to actually pay someone off. These suits can unfortunately lead to wage garnishments
, bank executions and property executions.
Most of these debt settlement companies have local attorneys in your state who are willing to represent you in defending against a civil collection lawsuit for free or low cost.
So, botXXXXX XXXXXne you need to find out what the debt settlement company is going to do for you with regard to this lawsuit. Clearly, you need someone to defend you or pay off the debt.