Can I take actionagainst a debt consolidator who has not acted as agreed?

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Can I take actionagainst a debt consolidator who has not acted as agreed?

I signed up with a debt consolidation company about 2 years ago. I had a $5,000 debt, and they assured me that the money would be paid off within 36 months. It has been over 2 years and they are now informing me that I still have 22 more monthly payments and a high balance. I never had a late payment since I signed up and have discovered from my creditor that they barely received a proposal from this consolidator company on 05/10. Can I take legal action towards this consolidator company, since I have been a loyal customer to them and always made sure I paid them on time?

Asked on November 18, 2010 under Bankruptcy Law, California

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

You may be able to take action against the consolidator on one of two possible grounds:

1) If you have an agreement with them--preferably a written agreement, since the terms can be proven--and they have not honored that agreement, you could sue them for breach of contract. Note that you would need to read any agreement(s) very carefully, to make sure that they are in fact in violation--if  it was the case that they have actually honored the letter of their committments (so read the fine print), then you would not have a cause of action unless;

 

2) If they made material misrepresentations to you to induce you to sign up up with them--i.e they lied in a significant way to get you to do business with them--you may have a cause of action for fraud.

If you think either or both are the case, you should consult wiith a lawyer who can confirm whether you have cause of action and your options.


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