If you are struggling with overwhelming debt, you may have considered using a debt settlement attorney to negotiate with your creditors and settle your debts for less than the full amount owed. While debt settlement lawyers can be very effective at significantly reducing your debt, there are some potential pros and cons to evaluate before deciding to hire one.
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Why Hire a Debt Settlement Lawyer?
Expertise. Debt settlement lawyers have extensive experience and legal expertise in debt negotiation and settlement. They understand the laws and procedures involved and are often able to obtain more favorable settlements than a consumer negotiating debt settlement on their own.
Reduce debt. A good debt settlement lawyer may be able to reduce your total debt balances by 40-60% or more through negotiated settlements with your creditors. Whatever is not settled may be discharged at a lower cost, giving you significant debt relief.
Stop harassment. If you are experiencing frequent and harassing calls, letters, and other contact from creditors trying to collect on your debts, a debt settlement lawyer can handle communication with creditors on your behalf and put a stop to the harassment.
Avoid bankruptcy. For many consumers, debt settlement is a preferable solution to avoid the consequences of bankruptcy such as damaged credit and losing valuable assets. A debt settlement lawyer can make debt settlement a reality for those in risky situations.
Repayment planning. As debts are settled, a debt settlement lawyer will help you set up a realistic repayment plan to settle the negotiated amounts until all your debts are eliminated. This can provide financial peace of mind through an end in sight to your debt struggles.
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Are Debt Settlement Lawyers Worth It?
Paying less than the original amount may sound great. However, you should be aware of some of the drawbacks when working with debt settlement attorneys:
Fees. Debt settlement lawyers charge fees for their services, often a percentage of the amount of debt they are able to have reduced or settled. This means you do not know the exact fee amounts until settlements are reached. While fees are contingent on performance, you could end up paying a sizable amount for their services.
Credit impact. While less severe than bankruptcy, debt settlement can still negatively impact your credit in the short term. Credit scores may drop as creditors report settled debts for less than the full amount. The impact lessens over time as you repay the settled amounts, but your credit may be impacted for a couple of years.
No guarantee of settlement. There is no guarantee that all your creditors will agree to a settlement or that settlements will amount to a certain percentage of reduction in your debt. While lawyers will strive to get the best settlements possible, there is inherent uncertainty in the debt settlement process.
Timeframe. The debt settlement process can take time as lawyers negotiate with creditors and settlements are reached one by one. For those seeking immediate relief from debt burdens, debt settlement may not move fast enough, especially if some creditors refuse settlement offers.
Should You Hire A Debt Settlement Lawyer?
No one can answer that question except you. While a debt settlement attorney can provide valuable benefits in reducing significant debt, it is important to weight the pros and cons so you can make a decision that works best for you. If you do decide to proceed with a debt settlement lawyer, choose an experienced professional and get details of fees. Finally, make sure to get everything in writing upfront. Many who have past experiences with debt settlement attorneys have been surprised by enormous fees despite not getting much out of the service.