Using a Debt Settlement Attorney vs a 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 who use a  debt-settlement company 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.”  Chapter 7 cases are completed by our office over 95% of the time.

What happens, according to Ed Boltz, president of NACBA is.  “These particularly vulnerable consumers usually end up getting sued.  Clients are stuck with outrageous fees, more deeply in debt, and far worse off in terms of their credit score (than if they filed bankruptcy). The problem with debt-settlement programs is they encourage consumers to default on their debts.”  Debt Settlement Attorneys often have the authority of a federal court order from a federal judge. Debt settlement companies have to beg.

How Debt Settlement works

Debt Settlement companies encourage clientsto default to make money from the Debtor. The company will hold the payments and fail to pay the creditors.  These debt settlement companies often file bankruptcy themselves as Ameridebt did. Other debt relief companies have included Freedom Debt Relief.  They pay themselves from the first payments made.  Little or nothing is paid to the creditors.  Over 90 % of the time the client cannot finish the plan. In most cases, 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.  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 a lower percentage.   Sometimes with less impact on their credit.

We work with you to educate you and act with you to solve the problem. By staying connected with you we can answer your questions and provide you the solutions you were looking for. We understand you are busy and you don’t want to pay extra fees for an answer to a simple question. This is why we have flat fees for services. If you need an answer to a tactic to take or a legal question you can schedule an appointment with Nick personally. By using a debt settlement lawyer you can sue the debt collectors. This is something a debt settlement company can’t do.

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. They plan 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 the 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.

Debt Settlement Companies vs Attorneys and Bankruptcy

Instead of the scam of a debt relief company who often makes false promises and fails to produce results you may want to use an attorney for the same or lower cost. Often the results are better, and it takes less time. The debt relief attorney often has a background in accounting, tax, and finance and years of litigation skills. The employee you are talking to with a debt relief company may have just gotten out of prison last week from his last job scamming consumers.

Debt relief companies rarely hire attorneys.   They often use the words legal or law in their company name and advertising. When a debt is forgiven through a debt relief company, you can expect a 1099-c tax bill from the amount of debt that is unpaid. Bankruptcy avoids this Debt Settlement does not. A creditor who fails to work with the court in bankruptcy can lose the right to collect.  Wikipedia lists Bankruptcy as the major tool for Debt relief by consumers. According to Wikipedia Debt settlement companies themselves claim a 50% failure rate.  The CFPB and other sources claim it is fraudulent  and higher.

How a Debt Settlement Attorney works

If you wish to settle your debt and you are being sued, we can make an offer to the creditor’s 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 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 four offers, and all four of our offers were accepted.  Our attempts at debt settlement after a client was sued was cheaper than filing 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.

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