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Debt consolidation companies, under Federal Trade Commission
rules, are not allowed to take any payments from you for their services until they have resolved your debts. Thus, they cannot claim this was a fee for their services. Second, if you paid the money to the old company, then the old company is liable to have either paid the creditors or turned that money over to the new company to pay the creditors.
In MA the failure to make payment by either company, when you paid them is considered an unfair business practice under MA Gen. Law Section 93A. Thus, your first step is you have to send a letter to both the old and new company telling them that their failure to make the payment is a breach of contract
and also a violation of MA Gen. Law Section 93A and you need to give them the opportunity to fix the problem. You need to tell them that their failure to remedy the breach would lead you to sue for up to 3 times the amount of the damages plus attorney's fees pursuant to Section 93A. The letter must be sent to avail yourself of the rights under 93A and here is a SAMPLE Section 93A letter
for you to send.
If they do not respond to the letter and rectify the matter, then you file a civil suit against BOTH companies seeking treble damages and your attorney's fees as provided by law. Furthermore, you would file a compliant with the Federal Trade Commission (http://www.ftc.gov) against them for improper consolidation practices.
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