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Law Educator, Esq.
Law Educator, Esq., Attorney
Category: Legal
Satisfied Customers: 110363
Experience:  JA Mentor -Attorney Labor/employment, corporate, sports law, admiralty/maritime and civil rights law
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I was with a debt consolidation agency and this past July they

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I was with a debt consolidation agency and this past July they switched me over
to someone else. The old company took my money in July and did not pay my creditors
during the switch over. The new company is taking the money now as of August and will pay the creditors but, in July no one paid my creditors. The old company took my money.
Now, creditors are calling and saying they didn't get the monies in July and will kick
me off the program unless I get answers. HELP
Thank you for your question. I look forward to working with you to provide you the information you are seeking.

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 ( against them for improper consolidation practices.

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Customer: replied 3 years ago.

Thank you for your help, I will send the letters. But, right now my credit is getting ruined by being late and not paying Julys payments. How much should I sue for if it comes to that? And how are they going to fix my credit?

I understand your credit is getting made a little worse than it was before.

Putting a value on damage to already damaged credit (someone in consolidation has already had debt problems so their credit scores are already not the best) is very tough and to do so you would have to demonstrate some type of loss you incurred because of the drop in credit score from the month they did not make the payment and this would require a consumer protection attorney locally looking at your whole credit and financial report to determine if there is a number they can affix to that for damages.

They are going to have to notify the creditors that the late payment was due to the change in companies and it was their error and not your error to get the creditors to remove any negative reports for that month.