Debt Settlement Attorney
Posted on November 15, 2021 in Debt
Finding yourself in mounting credit card debt and don’t know what to do? For one or many reasons, this happens to many people. The important thing to know is you do have options. Bankruptcy and debt consolidation aren’t the only answers. More people are realizing the convenience and benefit of hiring a debt settlement attorney to help them out of their debt situation.
Table of contents
- What Do Debt Settlement Attorneys Do?
- Can a Lawyer Help with Credit Card Debt?
- How Much Does a Credit Card Debt Settlement Lawyer Cost?
- How Much Do Debt Companies Settle For?
- Should I Hire an Attorney for Debt Settlement?
What Do Debt Settlement Attorneys Do?
Debt settlement attorneys negotiate with your lenders on your behalf if you have a large amount of unsecured debt to help lower the amount of debt you owe. A good debt settlement attorney will take the time to explore all of your options and can help you figure out if you really should try to settle your debt or do something else, like file for bankruptcy. While bankruptcy might be a good option for some, it’s not a good solution for everyone and vice versa with debt settlement companies.
The major difference between a debt settlement attorney and a debt settlement company is that an attorney is skilled to provide practical legal advice after fully analyzing your situation. Debt settlement attorneys have the negotiation skills to properly represent you to your creditors and can also represent you if a creditor files a lawsuit. A debt settlement company is not able to do that.
Can a Lawyer Help with Credit Card Debt?
Yes, a lawyer can help settle credit card debt, and they’re called debt settlement attorneys. If you need help settling your debt and are not sure of how to go about settling, you may want to seek the advice of a reputable debt settlement attorney.
Benefits of a debt settlement attorney:
- A debt settlement attorney will go over all of your debt relief options with you, and based on your situation, will help you figure out the best way to move forward.
- A debt settlement attorney can defend you if you get sued by a creditor.
How Much Does a Credit Card Debt Settlement Lawyer Cost?
How much a lawyer will cost to settle your debt will depend on a few things:
- The scope of the work performed
- The type of debt you have and the amount of the debt
- How difficult it will be to settle the debt
There are some circumstances where a debt settlement attorney may increase fees, and those situations include:
- If the creditor has filed a lawsuit against you
- If the creditor has obtained a judgment against you
- You want to negotiate the terms of secured debt as well
Not all debt relief attorneys charge the same. Attorneys have several different ways to charge for their service. A law firm may even offer free consultations to those seeking settlement services.
Flat Fee Rates
Some debt settlement attorneys charge a flat fee to negotiate with your creditors. Depending on how many creditors they have to negotiate with, they may charge a flat fee to handle the entire negotiation through settlement. Average flat-rate fees can range from $500 to negotiate a simple credit card debt to more than $5,000 for more complex negotiations.
Rate Per Hour
Some debt settlement attorneys charge an hourly rate to negotiate with your creditors. You may also see different rates depending on if you’re searching for Florida debt relief compared to California. That means the lawyer could agree to let you pay as you go, or they could require you to pay them a retainer. A retainer is a lump sum of money you pay the attorney in advance to be available to provide you with the service(s) you need. The hourly rate an attorney charges will depend on several things, including the amount of experience the lawyer has and where you live. In most cases, debt negotiation can be anywhere from $125 to $350 per hour.
Fees Based on Debt
An attorney also has the option to charge based on the amount of debt you have. That means the fee will be a specific percentage of the amount of debt the attorney will need to negotiate with your creditors.
Fees Based on Amount Saved
An attorney for debt settlement can also charge a percentage of the money you’ll save with the settlement. Usually, with this payment option, the attorney’s fees increase with the amount of savings, giving the attorney even more incentive to get you the best settlement.
What Is An Unbundled Service?
When it comes to hiring a debt settlement attorney, you have the option of hiring them to handle everything involved in the negotiation process, or you can hire them to handle specific tasks throughout the process.
You may decide that you would prefer to handle the negotiations, but you would want the lawyer to handle a specific task, like drawing up the settlement proposal. That is called an unbundled service.
The lawyer would charge a fee only for the service they perform, and that fee will vary depending on the complexity of the task they handle.
Since you would be handling the negotiation, the unbundled service will cost less than hiring an attorney to handle the entire negotiation.
How Much Do Debt Companies Settle For?
Creditors don’t have to settle. But should you or someone on your behalf plan to negotiate a settlement agreement for your unsecured debt, be prepared to pay at least 50% of the debt. And this may come after a few attempts at a settlement agreement. Most unsecured creditors will agree to take around 30% to 50% of the debt. Should you try to negotiate yourself, remember to always start off low, at about 15%, and negotiate up from there. However, the more cash you have on hand to pay them right away, the more likely they’ll agree to a lower settlement and payment plan. That’s because creditors are more willing to take a cash offer right then and there than to wait for multiple smaller payments over a while.
Should I Hire an Attorney for Debt Settlement?
Depending on different financial situations, there are multiple options you can take to negotiate your debt settlement. You could file bankruptcy or work with an experienced debt settlement company. When you don’t wish to go through bankruptcy, you have the option of a debt settlement company. The debt settlement company is a for-profit company that will not consider doing what’s in your best interest. You can’t even be sure they’ll go to bat for you because they get paid regardless.
A debt settlement attorney is hired to go over all of your options to help you do what’s in your best interest based on your situation. They will even take on your case and settle the debt negotiation for you or represent you in court if a creditor sues you.
Debt Settlement vs. Bankruptcy
There are many reasons people end up with overwhelming debt — job loss, illness, divorce — and few options when it comes to settling that debt. Millions of people were laid off during the pandemic alone, and many had to figure out how to get out of serious debt. Bankruptcy and debt settlement are two debt relief options people look to.
When trying to get out of debt, Bankruptcy is usually one of the first options people consider. While bankruptcy (Chapter 7 or chapter 13 bankruptcy) is a good option for some situations, it’s not always the best option when compared to hiring a debt settlement attorney.
New bankruptcy laws don’t make getting a bankruptcy as easy as it once was. There are fees to pay to file bankruptcy, and the new laws now require the debtor to attend classes. In some cases, a personal financial management course has to be completed, and the debtor must also go through credit counseling. The court has to approve your bankruptcy request.
Once a debtor has gone through the process of filing bankruptcy, and it is approved, it usually puts a stay on debt collection, meaning that a debt collector can no longer harass you. Notifications are sent to all of your creditors, and depending on the type of bankruptcy you file, you’ll be expected to either sell off material possessions to pay back creditors or have a trustee manage your money to ensure that over a course of several years, your debt is paid back. That will also mean that your credit will take a hit for several years as well.
Some downsides to bankruptcy:
- There is a filing fee.
- You have to attend classes that can include bankruptcy class, financial management, and credit counseling.
- There’s no guarantee the court will approve your filing.
- Your credit report will take a hit for seven years.
- It can take up to five years to pay back creditors.
- You may have to sell off material possessions.
Debt settlement requires putting your financial state in the hands of a debt settlement company that you pay a monthly fee to as they’re working with the creditors to try to negotiate your debt. They may even want you to pay them rather than your creditors as they negotiate a settlement payment for you. This settlement fee is a lump sum that is less than what you currently owe. Similar to a debt settlement attorney, they may also require a contingency fee, which is a percentage based on the amount you save through settlement, and other fees, like a set-up fee.
Unlike the bankruptcy process, if you stop paying your creditors while a debt settlement company is trying to negotiate on your behalf, there’s no guarantee the collectors won’t keep calling, and the payments you miss are still being reported to the credit agency.
Some downsides to debt consolidation
- Debt will continue to grow during negotiations between the debt settlement company and creditors.
- Debt settlement fees can be expensive to include a set-up fee, a monthly fee, and a percentage of each settled debt (approximately 25%).
- You have to be cautious they are not scammers out to get your money.
- Your credit report will take a hit as your debt is rising.
- There’s no guarantee they will be able to negotiate with creditors.
- Creditors don’t have to accept a lesser amount than they’re owed.
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