Making the Decision to Hire a Debt Settlement Attorney Requires Some Important Considerations
Debt settlement is the negotiation of debt with a creditor to settle the debt by paying less than the full amount owed. A debt settlement attorney can negotiate for you to pay between 10-50% of your debt. A lump-sum payment or a monthly payment plan could be used to pay off the debt in a more manageable way.
Debt settlement requires you to have some way to make the repayments as discussed. Most creditors are leery of granting too much time to resolve debts that have already been defaulted on. If you’re expecting a large chunk of money through a tax return, inheritance, or property sale, debt settlement becomes easier.
Borrowers who fail to make good on their repayment obligations following a settlement run the risk of being sued in court. The process of negotiating a debt settlement can still carry on after a creditor takes you to court to recover a debt in a settlement, but it’s more difficult.
Debt settlement can provide some relief, but you need to be mindful of the long-term ramifications of this strategy. The forgiven debt is considered taxable income by the IRS. You must seek professional help to make sure you understand all the tax implications of any debt settlement and for IRS tax relief assistance as well.
Can I Use Debt Settlement in my Case?
When you owe money, you have a duty to repay it in full, no matter how small the sum may seem at the time. A creditor is not obliged to agree to debt settlement. Ascertain whether your creditors will consider a debt settlement plan at all. Some debt collectors are more ready to work with you than others.
Furthermore, not all debts can be repaid. When a creditor can sell the collateral to collect more of the initial amount, debt settlement is seldom a possibility. Personal loans, credit card bills, and medical bills are examples of debts that are commonly settled through debt settlement services because the debt is unsecured.
Should I Use a Debt Settlement Attorney?
Consider your options carefully before deciding on how to proceed: employ a lawyer, represent yourself in court, or allow a creditor to collect on a judgment. If you owe what the creditor says you owe, and the creditor has the legal right to collect, you may have no recourse. In this situation, a lawyer is unlikely to be of much use.
A lawyer may be able to bring a counterclaim against the collection agency if the creditor breached legally mandated processes for collecting debt, such as harassing you illegally.
Standard legal defenses may also be effective. If the creditor was unable to collect the debt because of a statute of limitations that has expired, the court will decide in your favor, and dismiss the case. Creditors may also launch a lawsuit in the incorrect court, or they may not have the proper papers to do so. A strong legal defense is needed once more.
Can I Afford a Debt Settlement Attorney?
Consider the costs before deciding to counterclaim or defend yourself. Is your debt so huge that you can afford the time and money it will take to win? You might be charged legal expenses by the court, and have them added to your debt if the creditor prevails.
If you’re considering hiring an attorney, be sure to discuss fees upfront. It is common for attorneys to bill by the hour or on a contingency fee, which is a portion of any money you win from your lawsuit. A fixed price can be requested in some situations, although this is normally reserved for basic issues.
Ask your lawyer about the strength of your case; if you have little hope of winning, it may not be worth your time and money to hire an attorney.
However, if you have a large financial problem, grounds for defending yourself or countersuing, and don’t feel comfortable performing the legal process on your own, an attorney can be worth the expense.
How to Choose a Debt Settlement Attorney
In addition to getting suggestions from friends and family or going via non-profit debt counseling organizations to find a lawyer, you should also perform your own research. Use the internet and government sources to check out the attorney’s previous work. You should verify that the lawyer has a valid license. Think about whether you and the lawyer will get along during your first meeting, and ask open-ended questions regarding the lawyer’s experience in debt-collection lawsuits.
A skilled debt settlement attorney can drastically reduce the amount of debt you need to repay, so consider hiring one when debt settlement is on the table.