lawyer vs. debt settlement company: which should i use?

And although it often makes sense to hire a lawyer, make sure you're hiring a legitimate law firm and not a debt settlement company masquerading as one. In almost all cases, it's better to hire a reputable attorney rather than a debt settlement company if you want help negotiating a debt settlement.

Full Answer

Is it better to hire a lawyer or a debt settlement company?

And although it often makes sense to hire a lawyer, make sure you’re hiring a legitimate law firm and not a debt settlement company masquerading as one. In almost all cases, it’s better to hire a reputable attorney rather than a debt settlement company if you want help negotiating a debt settlement.

Should you use a for-profit debt settlement company?

Using a for-profit debt settlement company can be expensive. These companies often charge a set-up fee, a monthly fee, and a percentage of each settled debt (say, 25%), and they might pay themselves before paying any of your creditors. Or a debt relief company might simply disappear with your money.

Do I need a lawyer to collect a debt?

An attorney can defend you if you get sued. If a creditor decides to sue you to collect a debt, an attorney can defend you in the suit. Likewise, if a creditor violates the law in its efforts to collect from you, an attorney can provide specific advice and tell you how to proceed in your particular situation.

How do debt settlement companies contact creditors?

The debt settlement company will contact your creditors once you have saved enough—based on the company's opinion—and offer each one a lump sum that is less than what you owe. The debt settlement company might also charge a contingency fee, which is a percentage based on the amount you save through settlement, and other fees, like a set-up fee.

How successful are debt settlement companies?

Some debt settlement companies have successfully reduced unsecured debts by 40 to 60 percent. While negotiations are taking place on your behalf, the consumer is typically asked to cease making any monthly payments on their unsecured debts.

Is it worth it to do debt settlement?

The short answer: Yes, debt settlement is worth it if all of your debt is with a single creditor, and you're able to offer a lump sum of money to settle your debt. If you're carrying a high credit card balance or a lot of debt, a settlement offer may be the right option for you.

What is the best way to settle a debt with a collection agency?

Negotiate with the debt collector using your proposed repayment planExplain your plan. When you talk to the debt collector, explain your financial situation. ... Record your agreement. Sometimes, debt collectors and consumers don't remember their conversations the same way.

What is a reasonable offer to settle a debt?

When you're negotiating with a creditor, try to settle your debt for 50% or less, which is a realistic goal based on creditors' history with debt settlement. If you owe $3,000, shoot for a settlement of up to $1,500.

Is it better to settle a debt or pay in full?

It is always better to pay off your debt in full if possible. While settling an account won't damage your credit as much as not paying at all, a status of "settled" on your credit report is still considered negative.

What is the disadvantage of debt settlement?

Cons of Debt Settlement These are the main drawbacks: Late fees: When you stop sending payments to your creditors, you'll begin accruing late fees, interest charges and other penalties. Time commitment: The normal time frame for a debt settlement case is two to three years.

Can I pay original creditor instead of collection agency?

Even if a debt has passed into collections, you may still be able to pay your original creditor instead of the agency. Contact the creditor's customer service department. You may be able to explain your situation and negotiate a payment plan.

What are the pros and cons of debt settlement?

In any case, it's important to weigh the pros and cons of debt settlement so you can make the right choice for your situation....Debt settlement pros and cons.ProsConsPay off debt soonerCould come with feesStop calls from collection agenciesCould hurt your credit2 more rows•Jan 26, 2022

What should you not say to debt collectors?

9 Things You Should (And Shouldn't) Say to a Debt CollectorDo — Ask to see the collector's credentials. ... Don't — Volunteer information. ... Do — Make a preemptive offer. ... Don't — Make your bank account accessible. ... Maybe — Ask for a payment-for-deletion deal. ... Do — Explain your predicament. ... Don't — Provide ammunition.More items...

What percentage will creditors settle for?

Lenders typically agree to a debt settlement of between 30% and 80%. Several factors may influence this amount, such as the debt holder's financial situation and available cash on hand.

How long does it take to improve credit score after debt settlement?

between 6 and 24 monthsHowever, a debt settlement does not mean that your life needs to stop. You can begin rebuilding your credit score little by little. Your credit score will usually take between 6 and 24 months to improve. It depends on how poor your credit score is after debt settlement.

What percentage do debt collectors take?

between 25% to 50%The creditor pays the collector a percentage, typically between 25% to 50% of the amount collected. Debt collection agencies collect various delinquent debts—credit cards, medical, automobile loans, personal loans, business, student loans, and even unpaid utility and cell phone bills.

How Debt Settlement Companies Work

Debt settlement companies often claim that they’ll be able to talk your creditors into settling your unsecured debts for pennies on the dollar. If...

Why Hiring A Lawyer Might Be A Good Idea

If you think you need help settling your debts or are unsure about whether negotiating settlements is a good idea, a skilled attorney can provide y...

You Can Settle Your Debts on Your Own

You can arrange a debt settlement yourself. If you are certain that you want to settle your debts rather than filing bankruptcy or some other optio...

How Debt Relief and Debt Settlement Work?

Debt Relief and Debt Settlement is a negotiated agreement by which a creditor accepts less than the total amount owed to legally satisfy a debt.

Schedule Your Free Debt Analysis

Potential clients speak with a certified debt specialist regarding their financial situation.

Enroll into Our Debt Relief Program

Signed enrollment documents are processed and the new client receives a call from our team of dedicated account managers to welcome them to the program.

Negotiations & Settlement

Our talented negotiations team begins working on client accounts immediately.

Debts Resolved!

Your debts will be resolved in a few short years or even months so you can have a new beginning financially.

What is Debt Settlement?

Debt settlement helps reduce what you owe on unsecured debt. Each time you settle a debt, the lender or creditor allows you to pay a fraction of what you owe and forgives the remaining balance. You can take a DIY approach, hire an attorney or enlist a debt settlement company to do the work for you.

Debt Settlement Attorneys

Here’s a breakdown of what debt settlement attorneys do, how much they charge, and how to decide if hiring one is most ideal.

Debt Settlement Companies

You can also hire a debt settlement company to get a handle on your unsecured debts.

How to Enroll in a Debt Settlement Program

If you have over $10,000 in unsecured debt, consider Accredited Debt Relief to help resolve your outstanding balances with creditors.

How do debt settlement companies work?

Debt settlement companies claim that they can convince your creditors to settle your credit card or other unsecured debts in full by offering lump-sum payments that are less than the total amounts you owe. Debt settlement companies often claim they can cut your debts in half or perhaps even more.

What is debt settlement company?

A debt settlement company might charge high fees for services you could do yourself, drop the ball when it comes to negotiating with your creditors, or simply take off with your money. During the time it takes the debt settlement company to work with your creditors—or for you to figure out you’ve been scammed—you could get hit with late fees ...

What is a consumer credit counselor?

A consumer credit counselor can: go over your current financial situation. help you to come up with a budget that manages your finances, and. in some cases, develop a personalized plan—called a debt management plan— to deal with your debts, though the agency will likely charge a fee for this service.

How to get rid of debt?

Getting in Touch With a Lawyer. A debt relief lawyer can help you negotiate settlements with your creditors. (Keep in mind that if you settle a debt for less than you owe, you might face tax consequences. The IRS generally considers canceled debt of $600 or more as taxable, though exceptions to this rule exist.)

Can a debt settlement company collect from you?

Even if the debt settlement company manages to settle one or more of your debts, you might end up with more debt than you had initially. Besides, creditors and debt collectors often refuse to negotiate with debt settlement companies. They might even step up their efforts to collect from you by filing a lawsuit, for example.

Is debt settlement a scam?

If a debt settlement company makes any of the following claims, it’s most likely a scammer. The company guarantees your unsecured debts will be paid off at less than half their value. The company charges large monthly service fees.

Can I get help after paying my credit card debt?

They might provide little or no help after you've paid them. Even if the company does negotiate your debts down, you’ll be paying for services that you could have done yourself or would have better off paying to a legitimate credit counseling company or a lawyer.