If you’re not able to stay current on your bills due to medical expenses, a job loss, or other life circumstances, you may wonder if you need to hire a lawyer to help you settle your debts with your creditors. For most people, the answer to that question is yes. Here are a few things to look for when you’re retaining an attorney for debt settlement purposes.
Debt Settlement Companies
An attorney who is knowledgeable and experienced in helping clients settle with creditors can make all the difference in how successful your efforts are. However, be careful about who you hire. You want to avoid lawyers who are just frontmen for a debt settlement company.
Debt settlement companies say they can negotiate your debt down to pennies on the dollar. The truth is that you’ll have to stop making payments for that to happen. Most of these agencies have you make a monthly payment to them instead of paying on your debts. The amount covers the fees for the company, and the rest goes into a sort of savings account. Later, the debt settlement organization uses that money to pay toward your debts. This process causes a few problems.
- It wrecks your credit since you stop making your payments to the creditors.
- While you aren’t making payments, the creditors add interest and penalties to your debt.
- Sometimes the debt settlement company can’t negotiate your debt down at all. Creditors are not legally obligated to work with them.
- Some creditors will sue you faster once they know you’re working with a debt settlement agency.
Remember that debt settlement companies are businesses that are out to make money. With rare exceptions, you’re better off using the money you would have paid the debt settlement company to pay down your debt.
A skilled attorney who knows the rules and regulations of your local jurisdiction can give you reliable legal advice and even represent you if you get sued. Debt settlement companies cannot provide that service, even if they have a lawyer on staff. A lawyer can tell you about all of your possible courses of action. Working together, you may find that you don’t need to settle your debts at all. Bankruptcy might be a better option for some consumers. Debt settlement companies can’t and won’t discuss that possibility with you.
If you do get sued by a creditor, an attorney can represent you in court to defend you, but he or she can also help you go after creditors who violate the Fair Debt Collection Practices Act. If you find yourself needing help with debt settlement or problem creditors, call a knowledgeable attorney, like a chapter 13 bankruptcy lawyer in Melbourne, Florida, to protect your rights.
Thank you to the experts at Arcadier, Biggie & Wood, PLLC, for their insight into chapter 13 and the law.