Denha & Associates, PLLC Blog

Negotiating Debt With A Debt Settlement Company Or Debt Attorney

By: Lance T. Denha, Esq.

Both debt settlement companies and debt relief companies are companies that claim they’re able to renegotiate, settle, or in some way change the terms of a person’s debt to a creditor or debt collector. That includes reducing the balance, interest rates or fees a person owes. You can try to do this yourself by contacting your creditors. Debt settlement and debt relief companies often charge expensive fees. These debt service companies usually do not have attorneys associated to help assist a consumer in the event lawsuits and litigation arises. Anything these debt service agencies do, with some guidance you can do as well.

An important item to keep in mind is to avoid doing business with any company that does not have a legal staff and attorney performing the work. Furthermore be weary of a debt settlement company that does or states any of the following:

• Charges fees before it settles your debts
• Touts a “new government program” to bail out personal credit card debt
• Guarantees it can make your debt go away
• Tells you to stop communicating with your creditors
• Tells you it can stop all debt collection calls and lawsuits
• Guarantees that your unsecured debts can be paid off

These types of companies are highly regulated companies by the Federal Trade Commission (“FTC”). The FTC has placed a ban on upfront debt relief fees. Debt settlement companies cannot charge a fee unless and until three conditions are met: 1) the company must renegotiate, settle, reduce or otherwise alter the terms of at least one of the consumer’s debts; 2) The consumer must agree to at least one written debt settlement or debt management plan or other agreement between the consumer and a creditor, and 3) the consumer must have made at least one payment to the creditor as a result of the agreement.

On the other hand, experienced debt settlement attorneys offer very different yet effective services based on the tactics, skill sets and experience level the practitioner. The debt settlement process is a much more aggressive process than credit counseling and debt settlement, and if it is successful it can get you out of debt as a whole by effectively disputing the debt or significantly reducing the debt in possibly less than half the time of credit counseling and debt settlement companies. While it can be risky and possibly impact your credit ratings in the short term, over the long term the risk to your credit scores is reduced. In addition, if your credit is already poor and if you may be considering a drastic measure such as a bankruptcy filing, then you have little to lose by trying to settle your debt. When someone decides to go down that path and try this approach, this is when using an attorney can be most beneficial.

Debt negotiation attorneys specialize in negotiating and litigating lawsuits with various creditors. They can effectively provide the leverage necessary by legal representation in and out of court needed with credit card companies, hospitals, medical providers, and others. Experienced attorneys know how to reduce the amount of debt you have. Sometimes the attorney has a background in the bankruptcy process, and they may guide you in that direction after reviewing your case. In other cases the attorneys will be more proficient in negotiating with creditors to reduce the amount of the money you will need to pay for a lump sum settlement.

Attorneys in this highly regulated industry provide the diligence and background check required to initiate the negotiation and settlement process. They will also contact any debt collection agencies that are involved in your case in order to waive the late fees, penalties, and other expenses accruing on your accounts. The debt negotiation attorney will come to terms with your creditors so that the collection agencies and credit card companies will contact the attorney instead of the consumer.

If you’re falling behind on your debts, you should contact your creditors directly. If you’re unable to work it out with your creditors, it is advisable to seek out the expertise of an attorney who has the skill and experience to significantly reduce or possibly eliminate your debt as a whole.