A debt settlement attorney is a lawyer who specializes in negotiating debt with creditors to reduce the amount of debt a consumer or individual must pay. They will go through your list of creditors and collection agencies to help try to stop additional penalties from accruing and late fees from being added to the account. The debt settlement lawyer will negotiate repayment agreements with the creditors.
One benefit of using an attorney to handle your debt settlement is that the creditors and collections agencies will now have to contact the attorney instead of the consumer. This is part of the Fair Debt Collection Laws. Those harassing creditor calls must stop as soon as the debt settlement lawyer takes over. If the creditor calls do not stop you may have to have the attorney file for harassment.
How Is A Debt Settlement Attorney Different Than Doing Credit Counseling?
Hiring a debt settlement lawyer is very different from signing up with a CCCS program. Credit counseling is just negotiating new interest rates and fees for your credit cards and unsecured debt. A debt lawyer, on the other hand, takes interest rate negotiation a step further to negotiate lower balances than what you owe. By using a debt settlement program, you can get out of debt in half the time of a credit counseling program.
Does Debt Settlement Hurt My Credit Scores?
Your credit may not be negatively affected by using the debt attorney. If your credit accounts are in good standing when you start using a debt settlement program then your credit scores could go down. However, you shouldn’t start a debt negotiation program with an attorney until your credit has already gone bad.
In a typical scenario in starting a debt negotiation program, by the time you have hired the attorney to settle your debt you should already be behind on your bills. Not paying your bills in general will have a negative impact on your credit score, so the damage to your credit report should have already happened prior to hiring the attorney.
Why Will A Creditor Work With A Debt Settlement Attorney?
The good news about the debt collection industry is that the collection agency only makes money when a debt is collected. They have a lot of motivation to settle debts quickly. They know that they may not have another chance or ever. The creditor’s biggest fear is that it could be a long time before they have another chance to collect or that the debtor will file a bankruptcy and never collect on the note.
Often you can get the creditor to report a “paid as agreed” as part of the debt settlement process. Remember that they want to collect from you and are afraid that you can file for bankruptcy. You actually have some negotiating power.
What Kind Of Debt Can A Debt Settlement Attorney Settle?
Typically a debt lawyer will only be able to settle on unsecured debts such as credit cards, unsecured loans, personal loans, medical bills and department store cards. The types of debt that cannot be settled would be secured debt. This category of unsecured debt includes cars and homes. If you stop paying on these, the lien holder will just take them back through repossession or foreclosure. In many cases, even with a repossession or a foreclosure you will still be responsible for some sort of balance due after the fact so beware.
What Is The Statute Of Limitations On Credit Card Debt?
In most states the Statute of Limitations is 7 years on unsecured credit card debt. If you wait long enough the debt may be uncollectable by the creditor anyway. You should speak with your state attorney general to see what the rules are. They are different in some states.
Your best bet is to not get into debt. Use credit wisely. It is not worth the headache in the future to be a slave to debt. You will appreciate having piece of mind more than a mountain of debt to worry about each month. Enjoy your life; do not slave away each month trying to pay it.
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