Creditors calling, past due notices piling up, and that looming cloud of debt hanging over you. Time to call a lawyer. Right?
Slow down. Debt is frightening, especially when you get official sounding letters with “FINAL NOTICE” stamped across the top. But there’s no need to rush into a lawyers office before you have all the facts.
Lawyers have their place in the world of debt settlement. But it’s important to go in armed with information and knowing your options. A debt settlement lawyer can help, it’s true, but not in every case, and not with every debt.
So before you pick up the phone and talk to a lawyer, take a look at out list of six ultimate things you need to know about debt settlement lawyers.
They Don’t Just Settle Debt
Often, debt relief lawyers will offer debt settlement packages, but they may also offer a la carte services.
They may, for instance, draft a settlement statement for a fee, without you needing to engage their services for the settlement itself.
What they do, though, is not quite as important as what they don’t do. Debt settlement and bankruptcy lawyers do just that: they specialize in settlement and bankruptcy. This means that if you are looking for credit counseling or a debt management plan, you are probably out of luck with an attorney.
Not All Attorneys Actually Settle Debt
Sometimes, a company will advertise that they are “attorney-backed”, which can trick you into thinking that you are working with an actual layer. Or, you may meet with a lawyer, only to find out that an assistant or paralegal will actually be handling your case.
Beware of these sorts of firms. Typically, you will not be getting the same level of care and attention to your case that you would from an actual attorney or debt settlement company.
They Can Get Pricey
Lawyers are famous for it. They are expensive.
Lawyers fee schedules are anything but standard, and it’s important to know, up-fron, how they are going to charge you.
Lawyers may charge:
Cost per Debt (or Creditor)
In this fee structure, you are charged a flat rate per creditor that needs to be settled with. If you have only one creditor, this is no huge issue, but if you have six, it can get expensive fast.
Fee Based on Savings
Some lawyers charge based on how much they save you in the settlement process. So if you owe $15,000 and your lawyer settles the debt for only $5000, your fee would be based on a $10,000 savings.
Fee Based on Total Debt
Some lawyers take a look at your debt as a whole, and calculate your fee based on that, taking into account the time and energy it will take to get everything settled.
Lawyers may also charge hourly, which can add up, depending on how much debt you have and how much time it will take to settle all of it.
They Can Help if You Are Sued
Something a debt settlement company cannot do that a debt relief lawyer can, is help if you are sued by your creditors.
Often, if you become very delinquent on your debts, especially if collections have been attempted, a credit company will simply take you to court over the money. A credit counseling company can’t help you there, since they aren’t attorneys, but a lawyer, obviously, can.
Lawyers who specialize in debt settlement can ensure that even if you are taken to court, not all is lost, and you aren’t at the mercy of your creditors.
Lawyers May Push You Toward Bankruptcy
Most debt settlement lawyers actually specialize in bankruptcy law. Because of this, they may push you away from settlement and instead suggest declaring bankruptcy.
And while this is a valid option for some, it isn’t the right move for everyone. If you are with a lawyer who is being overly pushy about bankruptcy, it may be time to either find a new one or look into a debt settlement or credit counseling firm.
You May Not Need One at All
The little known secret of debt settlement? If your debts aren’t too huge, you can often take care of it yourself.
People often think that credit companies will only talk to professionals, but the reality is, especially if your debt isn’t huge, companies are often happy to settle with you, no middleman required. Read up on debt negotiation tactics, practice in front of the mirror a bit, and then get on the phone, You may find you are able to settle your debts all on your own.
Don’t Rule out Credit Counseling
Debt settlement and bankruptcy are huge steps and they can have lasting impacts on your credit score.
Before you talk to a lawyer or even consider debt settlement as an option, look into credit counseling or debt management. You may find that the tools and resources to pay off your debt were already at your disposal, you just didn’t realize it yet.
For more on how we can help you get out of debt on your own and avoid bankruptcy, contact us today!