Q: Can I be sued if I'm enrolled in a debt settlement program?

A: Yes. Unlike bankruptcy and debt management programs (DMPs), debt settlement programs offer no legal protections. Whereas a DMP is an agreement between a debtor and his creditors, debt settlement is much more antagonistic. People who enroll in debt settlement plans have forsaken any chance of working with their creditors, and are taking a more hostile approach. Sometimes this is warranted, but as such, creditors may sue you if they believe they'll be able to collect.

The main thing to consider before enrolling in a debt settlement plan is whether or not you are a likely target for a lawsuit. Could you pay back your debts, in full, if you emptied your bank account and sold off some of your luxury assets? If so, you may be a likely target. But if you're really struggling to make ends meet with the crushing burden of your debts, you're highly unlikely to get sued. After all, the creditor has to believe he can actually recover damages, and ultimately, you could always just file bankruptcy anyway. For these reasons, legal action in debt-related matters is somewhat rare.

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