Did you join a debt relief company but now feel like they lied to you? Potentially, your credit score plummeted, you thought you were getting a loan, or you just faced a
debt collection lawsuit.
Whatever your experience has been, this article is for you. Here's what we will cover.
- Understand the Debt Settlement Contract and Cancellation Policy
- The 4 Steps to Cancel Your Debt Settlement Contract
- Your Options After Canceling A Debt Relief Program
- How to Cancel Freedom Debt Relief
- Process to Cancel ClearOne Advantage
- How to Cancel National Debt Relief
- Should You Cancel Your Debt Relief Contract?
Also, what do you do after canceling the contract? If you're struggling with debt and want to know what to do next, check out our
free, unbiased debt options comparison calculator (no email address required) that provides qualification and cost estimates for a wide range of debt options that fit your budget. The data is personalized to your income and expenses, and where you live, so that you can get estimated costs and pros and cons of different options. Debt relief may be an excellent option for you, but it's helpful to understand each of your options.
But before delving into the nitty-gritty of the article. Let’s consider what a debt settlement contract is so we know we're on the same page:
1) What is a Debt Settlement Contract?
A debt settlement contract (debt settlement agreement) is a document detailing how a debtor will pay their creditor with the help of a negotiating party. The debtor here is the individual who owes, while the creditor is the one owed. The negotiator (debt settlement company), helps parties to negotiate for a reduced debt sum, and propose new repayment terms.
Debt settlement companies often come in when debtors can’t repay their debt. They negotiate with creditors on your behalf.
However, debt settlement contracts can be unfavorable. It’s also possible that you suddenly don’t feel the need to remain in a debt settlement contract anymore. As such, we’ll discuss ways to exit the debt settlement contract.
2) Steps to Cancel a Debt Settlement Contract
Getting out of a debt settlement contract is easy if you haven’t made any payments yet. If you have, then the chances are high that you’ve lost the funds sent to them. If you’ve given the debt settlement company permission to draft fees directly from your account, then you should contact your bank and inform them that you’re terminating such an agreement.
Perhaps you’re worried that the draft will continue. If this is true, then it’s best to close your account and open another one that the debt settlement firm won’t have access to. In certain instances, you can simply void your agreement by rescinding payment. Regardless of the method you choose to adopt, you should be aware that your debt still exists. As such, you should call your creditors.
Exiting your contract with a debt relief company sometimes requires an attorney’s help. You may need an attorney if you’re considering a Chapter 7 bankruptcy option. A great attorney should consider your options and help you decide on the best. Here are the steps you need to take before you cancel a debt settlement contract:
Step 1: Submit Notice of Intent to Cancel to Both your Creditor and Debt Settlement Company
Unless your debt settlement agreement has reached the end of its term, you must notify both parties. Terminating your agreement before the expected date may incur penalty fees. Some debt settlement companies may waive this in special instances.
Step 2: Request the Company’s cancellation steps.
Providing your debt settlement company and financial house with a notice of intent to exit a debt settlement contract doesn’t trigger the process. There’s still a need to adhere to the debt settlement company’s specified cancellation process. As such, most companies will send you a message with steps to exit the contract. Except otherwise stated, you’ll have to keep making your original monthly debt payment.
After cancellation, you may have many questions, such as whether you will receive a refund from your escrow account or if your creditors will pursue legal action against you.
Please complete this brief form to share your most pressing questions.
Step 3: Pay outstanding fees
The debt settlement company may request that you pay a specific amount as the last step to exiting the debt. Exiting the contract without making the requisite payments may leave you legally undesirable.
Step 4: Pay lenders' outstanding debts or renegotiate
Now that you’ve exited the contract between yourself and the debt settlement company, the next step is to meet with your creditors. Since you’re still indebted, you have to inform your creditors of plans to repay the debt. You have two options here: negotiate for a new debt payment contract or make payments according to the original debt agreement. You will have to pay any missed or owed payments.
Once you’ve exited the contract, there are many options for handling credit card debt. Those options include
- Continue making payments to creditors as initially agreed
- Negotiate with creditors and ask for help
- Get another debt settlement company to help negotiate a more favorable payment term.
- Hire the services of a nonprofit credit counseling company via a debt management plan. An example of a non-profit credit counseling company is the National Foundation for Credit Counseling.
- Opt for a bankruptcy discharge
3) Your Options After Canceling A Debt Relief Program
The 3 main options after canceling a debt relief program may be bankruptcy, debt management, and another debt relief program.
As such, we built free resources to help you understand if you may qualify and the cost of bankruptcy and alternative options.
Bankruptcy Cost and Qualification Calculator
If you realize that you cannot keep up with any payments, you cannot save up enough to settle, and your options are running out, bankruptcy may be your next best step. Bankruptcy can help discharge some of your debts either through liquidation or a structured, extended pay-off schedule.
Debt Relief / Debt Management Calculator
If you want to avoid bankruptcy, you may consider other options.
It may be helpful to understand all your options if you cancel your debt settlement contract before creditors start hounding you again. As such, we have built a debt options and cost calculator that compares debt consolidation, debt management, and debt payoff planning.
This gives you an unbiased, holistic understanding of all your options.
4) How to Cancel National Debt Relief
National Debt Relief allows you to
cancel its program anytime when you cannot settle a debt or are dissatisfied with its services. According to National Debt Relief’s cancellation form, if you decide to cancel within 5 days of signing the contract, you are eligible to have everything refunded to you that you may have paid.
Here is the process to cancel your National Debt Relief contract. You should be able to find this information in your Debt Relief Agreement:
- Find the Notice of Cancellation form in your Debt Relief Agreement
- Sign and Date the Cancelation Form
- Fax the Cancellation Form to 1-866-460-5541 or scan and email the cancellation form to service@nationaldebtrelief.com
- Follow up on cancellation requests by calling the office at 888-660-7427
So, you probably have many questions when you cancel National Debt Relief, such as whether you will get a refund from your escrow account or be sued by your creditors.
5) How to Cancel Freedom Debt Relief
Freedom Debt Relief allows you to cancel a debt settlement contract at any time without demanding a penalty. We made a quick call to the company’s client representative via email and phone correspondence with Freedom Debt Relief’s customer service department. If you want to cancel a contract, all you have to do is call a representative of the company on (800) 655-6303.
This information can typically be found in your service agreement contract, so please refer to it for more specific details. However, this is the general process:
- Locate the Notice of Right of Cancellation Form that is found in your initial contract. According to the contract that is available online, this would be found on page 36 of the contract.
- Sign and date the Notice of Right of Cancellation Form.
- Mail it off to Freedom Debt Relief, LLC ATTN: TERMINATIONS PO Box 2330 Phoenix, AZ 85002-2330
- Follow up with an email to terminations@freedomdebtrelief.com.
- Alternatively, the contract does state that you can directly email terminations@freedomdebtrelief.com to request a cancellation.
You may also log in to the company’s
client dashboard to initiate the cancellation.
6) Process to Cancel ClearOne Advantage
If you’re not satisfied with all aspects of the settlement program offered by ClearOne Advantage, you should notify the company within the first 30 days of signing the agreement. By doing this, you can receive back all funds in your account. This includes both the debt settlement sum and settlement fees made to ClearOne Advantage. Your program will end once this happens.
To initiate the cancellation process, please call the Customer Loyalty Group at 888-768-4767 to further discuss the option of canceling your program.
7) Here are the Consequences of Exiting a Debt Settlement Plan:
- The interest rate on your credit card jumps back to the previous figures
- Late fees waived in the past may be brought back
- Payments are no longer consolidated into a single payment
- You must make payments separately to each account
- You may start receiving calls from collection agencies and creditors
Please note that this differs from canceling a debt management or credit counseling program.
Should You Cancel Your Debt Relief Contract?
Cancelling your debt relief contract is ultimately your decision, and you understand your finances. If you do cancel the program, what are your options and the costs of those options? Use our calculator below to compare your options if you decide to cancel your debt settlement contract.
