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Reasons NOT to Hire a Lawyer to Settle Your Debt

If you are like many people and are struggling in this time with your finances for various reasons, then one of the options you may be considering as a help or a boost is debt settlement. Debt settlement is a method of easing the strain of debt by negotiating with your lenders and credit card companies to accept a structured payment or flat amount that is less than the total amount due or at a lower interest rate.

While debt settlement can technically be handled alone, most people turn instead to professionals to assist with debt settlements due to the greater likelihood of an established company with a relationship already in place with the credit card companies and banks, being able to secure a better settlement deal. When looking for professional assistance with a debt settlement the two primary options available are to use a debt counseling service or to turn to a lawyer for assistance. Using a lawyer is something that tends to make some people feel safer just on principle, but there are some definite downsides to going that route rather than just turning to a good debt consolidation/settlement company.

  1. Higher expense: Using a lawyer for debt settlement tends to be a much more expensive option than going with a debt counseling or settlement company. This is because most lawyers will take a percentage of the amount of money that they manage to save for you in addition to other fees. If you have $20,000 in credit card debt for example and you use a debt settlement attorney, they will likely charge you about 5% of the total as a retainer fee up front, and then charge you a monthly fee as well which can be as high as $100 per month for as long as you are in the repayment plan. So far this isn’t so bad, but when the lawyer also feels they deserve a percentage of the amount of money they manage to save you in negotiations (25%-40%), the expense adds up quickly.
  2. Expecting a stop to litigation: Many people turn to debt settlement attorneys for help if they are already being sued by a lender for a debt that they owe, but these attorneys are not able to stop legal action that is in already in progress against you.
  3. Expecting help with litigation defense: Since most debt settlement lawyers work on a national, rather than local scale, they are not legally able to provide a defense for you in court should you wind up being sued for your debt. You will have to turn to a specialist attorney that resides in and practices in your particular state.
  4. Expecting legal advice: For the same reason that a consolidation lawyer may not be able to represent you in court (they have not passed the bar for your particular state), they also may not be able to offer you legal advice. This is yet another restriction that makes the higher price to be paid for a lawyer to seem not quite worth it in the long run.
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