When to Hire a Debt Settlement Lawyer?

A debt settlement lawyer offers debt reduction or debt elimination service. They will negotiate with creditors so that the creditors are willing to accept a percentage of your debts as last payment. As they are knowledgeable about bankruptcy, it’s not uncommon that they urge you to file bankruptcy.

Experienced debt settlement attorneys dare to promise that they can work out a better deal with a creditor than you could work out for yourself. Most debtors who approach a creditor to work out a settlement still ends up paying about 75 cent for every dollar owed. But the experienced lawyers can reduce this number to 50-60 cent.

Does this mean that debt settlement lawyer can answer every debt problem? Check out the following requirements so you can get the advantage of hiring a debt settlement attorney. In fact, they work best under the following conditions.

You Are Deep In Debts

A reputable debt settlement lawyer often charge fees from $500 to $1000. At what debt level will the service be possible for you? Let’s calculate the cost and benefit using the following example.

For example, you owe $1000 to creditors and the lawyer is able to negotiate your creditors so that they are willing to accept $600 to settle the debt. If he or she charges you $600 for his or her work it means that you’ll pay a total of $1200. This amount is clearly much more than if you had negotiated with your creditors on your own.

So, hiring a debt settlement service will only be possible if you owe several thousand dollars and your total costs, including your last payment to creditors, are lower than if you work with the creditor on your own.

You Have Unsecured Debts

An unsecured debt is not assured by your assets, such as car or home. Examples of unsecured debts are credit card debts, medical bills, and student loans. An aggressive creditor may pursue these debts by garnishing your wages. But they usually take into consideration also the cost of collecting these debts.

A debt negotiation company will have much more luck negotiating on your behalf if the loan is unsecured. For secured debts, which are assured by your assets, most of creditors are unwilling to haggle for a debt reduction. If you make non-payment several times they just come and take your asset. In this case, if the loan is car loan, your car can be repossessed.

You Place a Reasonable Time To Negotiate

Negotiating debt settlement takes time. If you have a limited time for a certain reason — such as, the date your settlement must be reached before you apply for a home loan — you’ve made your debt settlement attorney in a lower bargaining position against your creditors.

For how long can a negotiation schedule be considered as reasonable? You need to discuss the time requirement with them in order for you to get the best debt settlement.

So consider contacting a debt settlement law firm if you have a large amount of unsecured debts and you place a reasonable time for the lawyer to negotiate with creditors. Even though a debt settlement lawyer can cost you a lot of money, if you hire the right attorney at the right time you can expect to have a stress-free, new life.

When to Hire a Debt Settlement Lawyer? was last modified: April 14th, 2014 by Paul Sarwana