Sometimes good people get overwhelmed with medical, credit card, and other kinds of debt. Many look into debt settlement companies as a way to negotiate with creditors. However, it’s almost always better to use a capable, competent attorney. Here are just a few reasons why.
Understanding All Your Options
Debt settlement companies turn a profit by including a fee for their services in a monthly payment that you pay directly to them. In turn, they negotiate with your creditors and then pay the bills with the money collected. Debt settlement companies are limited to this narrow scope of services. By comparison, a knowledgeable attorney can present you with all of your options, some of which the debt settlement companies won’t tell you about. For example, attorneys can help you with settling your debts, just like a debt settlement company. However, they can also discuss other legal options, such as bankruptcy.
Getting Help Beyond the Debt Settlement
An attorney can do much more for you than just handling the debt settlement process.
- A lawyer can represent you if your creditors sue you.
- Legal counsel can also help you take action against creditors who violate collection laws such as the Fair Debt Collection Practices Act.
- An attorney can advise you on the possible tax consequences of debt cancellation. The Internal Revenue Service (IRS) counts the cancellation of $600 or more of debt as taxable income. If you don’t calculate carefully, you could find yourself with a large tax bill.
Debt settlement companies cannot offer these critically important services.
Trusting the Advice You Get
When you hire an attorney to help you with debt settlement, you are working with a licensed professional held to high ethical standards. Debt settlement companies are not held to these same standards, even if they employ an attorney to give the company the appearance of legitimacy. In most cases, the lawyer is merely a figurehead and has nothing to do with handling your case.
If possible, choose an attorney who is local to your jurisdiction so you can meet with him or her in person. You can ask questions about how your case will be handled and who will communicate with creditors. In an ideal situation, the attorney would do this as opposed to a member of the office staff.
If you’re searching for help with debt negotiation, skip the debt settlement companies and look for an experienced, knowledgeable attorney who knows the local rules and procedures in your area.