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 a voluntary agreement between a debtor and his creditors, debt settlement is much more adversarial. People who enroll in debt settlement plans have forsaken any chance of working with their creditors, and are taking a more aggressive 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 of a creditor’s lawsuit.

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Please Note: Unsecured debts are debts such as credit cards, personal loans, lines of credit, store cards, medical bills, and utility bills that are not secured by collateral. Mortgages and car loans are NOT considered unsecured debt.
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