Unfortunately, debt is a way of life for most Americans. In 2021, total outstanding consumer debt reached a record $15.6 trillion, according to new data from the Federal Reserve Bank of New York. A large chunk of that debt came from mortgages and credit card balances, which increased by $52 billion in the last three months of the year. Rising car prices also led to larger auto loans, totaling $181 billion in the fourth quarter alone.
For many, that debt is unmanageable. Maybe that includes you. If so, you might be wondering whether it’s time to hire a debt settlement attorney who can help relieve the burden of overwhelming debt.
There are many situations when a debt settlement lawyer can help. But it’s not the right move for everyone. Here’s what you should know if you’re considering working with a debt settlement attorney.
What Does a Debt Settlement Lawyer Do?
A debt settlement lawyer specializes in helping clients deal with debt collectors, lenders, and creditors. In many cases, help their clients settle with creditors for much less than they owe. They work with people who are struggling with unsecured debt like credit card debt, private student loans, payday loans, medical bills, and more.
However, debt settlement is just one component of what these lawyers do. They know the ins and outs of debt collection laws and help defend borrowers against unfair and illegal debt collection practices. They can also defend you if you’re sued by a creditor or debt collector. Further, a debt settlement attorney can also walk you through all of your debt relief options. They may recommend alternatives to settling, such as filing for bankruptcy.
Unlike debt settlement companies, lawyers are held to higher ethical standards and operate in the best interest of their clients.
When to Hire a Debt Settlement Attorney
Hiring a debt settlement attorney isn’t the right move for everyone. However, in certain situations, a lawyer can help tremendously. Here are four cases when it’s worth working with a debt settlement lawyer.
1. You have an overwhelming amount of debt
If you’re dealing with one or two fairly small debts — say, less than $5,000 — it might not be worth it to hire a debt settlement attorney. Delinquent debt of that size or larger could still be manageable on your own. Plus, it does cost money to hire a professional and go to court.
On the other hand, if your total debt is much larger or you have multiple accounts, judgments, liens or creditors harassing you by phone or sending letters, hiring a lawyer could be worth it. Even with legal and court fees factored in, there may be an opportunity to save quite a bit of money and resolve the debt once and for all.
2. You’re being sued
If you’re facing a lawsuit from a creditor or collection agency, an attorney can help you through the process and is usually your best bet to ensure you are protected during the legal process. They can inform you of your rights under current debt collection laws and the legal process. They can also take over communications with the creditor or collector so you don’t have to deal with them directly and possibly even resolve the debt without going to court.
One important consideration is whether you have a defense or counterclaim to the lawsuit. If so, a debt settlement lawyer can help to defend you and respond to the debt collection lawsuit for you with those defenses and counterclaims. For example, if the statute of limitations on your debt has passed or the creditor can’t prove you owe the debt, your lawyer can help get the case thrown out. Or if you actually had paid the debt previously, your lawyer can help you file a counterclaim. That could result in the creditor withdrawing the lawsuit or owing you a money judgment.
3. There’s a judgment against you
A judgment is basically the result of losing a lawsuit. A court order gives the creditor or debt collector stronger tools to collect your debt. That may include wage garnishment, freezing your bank accounts or placing a lien on your property to collect the debt. The judgment may also include the creditor’s attorney fees, as well as court fees and interest.
If you’ve already gone through a lawsuit and the court issued a judgment against you, it may be a good idea to hire a lawyer. They can help you settle the judgment for less or challenge it in court to get the judgment vacated. A lawyer can tell you whether you have a good case to challenge the judgment. Doing so could help eliminate the judgment and ultimately result in not having to pay the debt.
4. You’re considering bankruptcy
Debt settlement is often a preferred alternative to filing for bankruptcy. It has less of an impact on your finances, credit report, and credit score. However, depending on your personal situation, including your ability to pay back debt, bankruptcy may be the better choice.
A debt settlement attorney can walk you through your options. There are different types of bankruptcy, including Chapter 7, Chapter 13, and even Chapter 11. Your lawyer can help you decide which makes more sense for your situation and if you qualify.
How Much Are Debt Settlement Attorney Fees?
One thing holding you back from contacting a lawyer may be the cost. After all, you’re already struggling financially. So how could you possibly afford an attorney?
Legal professionals understand this and usually structure their billing in a way that makes sense for their clients. That said, you should be prepared for the expense.
Debt settlement attorney fees are based on several factors, including:
- How complex your case is
- The types of debt you have and how much
- The difficulty involved in settling the debt with the creditors you have
In other words, the amount you pay in attorney fees is related to how much work your case will be for the lawyer.
Remember that you have some control over the scope of work needed. For example, you could hire a debt settlement lawyer to handle the full negotiation and settlement process and case. On the other hand, you could hire a lawyer to handle one specific task or limited scope.
When it comes to billing, there are several ways a debt settlement attorney might structure things. You could pay the lawyer an hourly fee, a flat fee for each creditor involved, or even a contingency based on what was saved. Some base the fees on how much debt you have. Others base the fee on how much the settlement ultimately saves you.
At Tayne Law Group, our law firm offers a free consultation with one of our experienced debt relief attorneys. They will provide a repayment quote, which is how much you will pay if you decide to join the program. The monthly payment is based on the full amount of debt you have, your budget, and how quickly you want to pay off your debts. There are several payment plan options available to fit your budget. (Get more info about our payment process here.) And the best part is that you don’t receive bills during the process. Knowing your debt is handled right is the best peace of mind.
Whether you’re struggling to keep up with your bills, falling behind on payments, or don’t have any funds left over after your bills are paid, there’s a good chance that we can help. Once you’re ready for a free initial consultation by phone, you can contact our offices by calling (866) 890-7337 or fill out our short contact form.