Are you struggling to pay off your debts? Are your loans and credit card payments overwhelming? If this is so, perhaps, it is the best time to enter into debt settlement.
Debt settlement is the process of negotiating with your creditors to get them to reduce the amount of your debts. This can be accomplished either by hiring a debt settlement company, hiring a debt settlement lawyer or by acting on your own behalf.
Debt Settlement Companies
Debt settlement companies claim that they can talk to your creditors to settle your debts. However, hiring them can be quite costly. Why?
First, you have to pay them a monthly fee for the service they’re giving you. Then, they tell you to save.
These savings are actually set aside for future settlement of your debts. When you have saved enough, the debt settlement company will contact your creditors and offer each one a lump sum payment that is less than what you owe.
In addition, the company may also charge a certain amount—a contingency fee based on a certain percentage of the amount that you saved in the settlement.
However, there are certain things that debt settlement companies won’t explain to you. One, that when you stop making payments, the total amount you owe will actually increase due to interest and other charges.
They also might not tell you that your creditors don’t have to accept a lesser amount than they are owed to settle the debt, or that many creditors don’t accept settlement at all, especially if the debtor is working with a debt settlement company.
Many companies do not fully disclose these risks. Well, it is because we have to remember, these companies are organized primarily for profit! They want to make a buck.
In many situations, the money that you spend in these companies are better off if you used it to pay your debts.
Debt Settlement Lawyers
Well, it makes sense to negotiate your own settlement so you can save money and maintain control over the process. In addition, your creditors may be reluctant to enter into settlement when it knows you can afford to hire a settlement company or an attorney.
However, your lack of experience can be a problem. Further, the process can be quite stressful.
This is the reason why many people hire the services of a good debt settlement lawyer. So what can a settlement lawyer do for you?
A good debt settlement lawyer can help you go over the options available to you. A good debt attorney should help you figure out if you really need to settle your debts with your creditors or whether you should explore other options like filing for bankruptcy.
In addition, if your lender, say your credit card company, decides to sue you to collect your credit card debt, your debt settlement lawyer can defend you in the suit. Likewise, if the creditor violates the law, a debt settlement attorney can provide specific advice and provide you with guidelines as to how to proceed in specific situations.
For instance, if your creditor violates the Fair Debt Collection Practices Act, your debt settlement lawyer can help you how to respond to the situation.
You have to be on the lookout against bad debt settlement lawyers.
For one, attorneys must be licensed.
Try to schedule a meeting with your debt settlement attorney. Sit down and speak directly with the attorney.
Find out if your debt settlement lawyer will deal directly with the creditors or if a member of the staff will be doing the negotiations. If a company tells you that they are “attorney backed” and will not let you personally see the attorney, this is a very big red flag that the attorney has little to do in the operations.
In this case, you are actually dealing with a debt settlement company. You also have to take note if the firm has indicated that you are on your own when you get sued. Beware!
This is actually a debt settlement company masquerading as a law firm.
A good debt settlement lawyer should be able to lower the amount of your unsecured debt that you can pay back. Of course, there is no absolute assurance that the debt settlement lawyer can really lower your debt, but the attorney can give you a much better chance to handle your creditors on your own or with a debt settlement service.
So how much does a debt settlement lawyer cost?
Many debt settlement attorneys charge based on contingency. Contingency means that you won’t pay something up front but your lawyer will take a percentage if you win your case.
The rate may be based on how much you owe or how much you’ve saved. Pricing will vary depending on factors such as where you live and the amount of your debts.
If you think you need a debt settlement lawyer, contact McCarthy Law today to speak to an attorney or debt paralegal for a free consultation.