A debt settlement lawyer is one that specializes in helping people to reduce or eliminate their debts. Sometimes a debt settlement lawyer will encourage a client to file for bankruptcy, but in many cases they will be able to work with creditors in order to agree a settlement where you only pay a percentage of what you owe to clear the debt.
Debt settlement lawyers can often help you get a much better deal than you would if you tried to agree a settlement directly with the creditor. In general, if a debtor approaches a creditor directly, they will usually end up paying about 75% of the debt as a settlement. A debt settlement lawyer can often reduce this figure, and the debtor will usually end up paying about 60% of the amount owed.
It's important to point out that debt settlement lawyers are not the answer to every debt problem. Debt settlement lawyers are worthwhile under the following conditions.
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Significant Debts
Debt settlement lawyers do not work for free - they often charge fees of around $500 or $1000, so you will need to owe quite a large amount for it to be worth using one. If you only owe around $1000, then it would cost you more to use a debt settlement lawyer than it would to just pay back the debt in full. If you owe several thousand dollars, however, then a debt settlement lawyer could save you a lot of money. For small amounts, it is usually worth trying to reach an agreement with the creditor yourself.
Unsecured Debts
Debt settlement lawyers are best used for unsecured loans. There are two different types of debt - secured debts, and unsecured debts. A secured debt is one that is linked to a property - a car loan, for example, or a home loan. If you do not pay back those loans, then the property will be taken from you.
There are different forms of unsecured debts. They include medical bills, back tax payments, student loans, credit card debts, back child support, etc. You need to know that creditors can pursue these debts aggressively if they want to. For instance, they can take steps to garnish your wages. However, it takes so much time and energy for them to collect on these debts that they usually just let them go. This is why a debt settlement lawyer will be much more successful intervening on your behalf if the loan is not secured. On the other hand, most creditors are not willing to haggle about a secured loan. They just show up and take the property. End of story.
No Time Limit
It takes time to reach an agreement to settle a debt. If you are in a rush to clear your debts - for example because you plan to apply for a new mortgage on a certain date, then you will have weakened the bargaining position of your lawyer. They will be able to reach a much better settlement if they have plenty of time to negotiate.
Hiring a debt settlement lawyer can cost a lot of money, and as such is a big decision, but if you owe a large amount of money in unsecured loans, and are willing to wait the length of time require to reach a settlement, then it can be a very good way to reduce the amount you owe, and rid yourself of the stress caused by having a large amount of unpaid debt.
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