Using a Debt Settlement Attorney v a Debt Settlement Company

Debt Settlement Attorney and Debt Settlement Companies

Debt Settlement Attorney

In the Wall Street Journal Michelle Singletary wrote this about Debt Settlement service companies. “Clients still end up paying as much as 75 percent of what they owe. Only about one in 10 consumers participating in debt-settlement programs end up debt-free in the promised period of time.  According to a consumer alert issued recently by the nonprofit National Association of Consumer Bankruptcy Attorneys. ”Debt Settlement Attorneys seem to have a much higher success ratio.”

What happens according Ed Boltz, president of NACBA is.  “These particularly vulnerable consumers usually end up getting sued, stuck with outrageous fees, more deeply in debt, and far worse off in terms of their credit score. The problem with debt-settlement programs is they encourage consumers to default on their debts”

How Debt Settlement works

Debt Settlement companies do that to make money from the Debtor. The company will hold the payments and often fail to pay the creditors.  These debt settlement companies often file bankruptcy themselves as Ameridebt did. They pay themselves from the first payments made.  Little or nothing is paid to the creditors as a business model.  Over 90 % of the time the client can not finish the plan. The majority or all of the funds paid in go to the debt settlement agency.  Now the Debtor is in default because the debt was not paid and the debtor is often sued for the entire debt since nothing was paid.  For most of these people Bankruptcy would have offered the ability to pay nothing back or at most a lower percentage.   Sometimes with less impact on their credit.

Federal Rules for Debt Settlement companies

Federal rules now make it illegal for debt-relief services to charge upfront fees. Debt Settlement companies often misrepresent what they can do and charge up-front fees anyway for a reason. Their plan is to fold the company and start back up in a new state when business runs out. They are not supposed to get paid until they successfully settle or reduce a customer’s unsecured debt. The companies have to make specific disclosures length of the plan, costs and consequences.  The reasons these companies do so poor a job compared to an attorney is they can’t sue the creditor back. At our office we have over 25 years of experience providing debt relief and bankruptcy services since 1988 as a Debt Settlement and Bankruptcy Attorney.

How a Debt Settlement Attorney can work.

If you wish to settle your debt and you are being sued we can make an offer to the creditors attorney who has sued you.  This offer is often for 50 to 70% of what is owed.   If the offer is rejected we have before used the retainer you have paid us as part of a fee to file a bankruptcy.  We have done the work.  The fees for attempting a debt settlement offer have been earned.   You have made every effort to settle the debt.  But if it hasn’t worked, we will allow you to file bankruptcy instead and use the fees paid for debt settlement towards filing a bankruptcy.

Normally we are better at debt settlement and obtaining a workable offer than a debt settlement company.  In 2017 we made 4 offers and all four of our offers were accepted.  Our attempts at debt settlement after a client was sued was cheaper than filing a bankruptcy.  In slightly over 100 other cases clients did not even make an offer.   But when we did make an offer the collection attorneys knew they were dealing with a bankruptcy attorney that could and would file bankruptcy or sue the creditor back.