First and foremost let me briefly explain what debt settlement is. Debt settlement is a process of defaulting on credit card debts to then later on negotiate a settlement to pay back the original debt balance owed at a much reduced amount. This process can save a person close to 50% of the debt they must repay. Plus they can look forward to becoming debt free within two years. Now the debt settlement process can be done two ways, either retain a debt settlement company or a debt settlement law office to enroll you into a debt settlement program. This writing will touch a few key differences between the law firm vs the company.
Like most things in life credit card debt settlement has it’s positives and negatives. The pros being the enormous savings of money and time. The negative things are going into default on the debts, collection calls and the possibility of a lawsuit. A credit card debt relief law firm has more securities to offer than the regular debt settlement company.
Lets first understand the possibility of getting sued. To begin I want to let everyone understand that it is not commonplace for the collectors to sue, but it is a possibility. Over 90% of people who end up going into default will never end up getting summonsed to go to court. However in the case that you get sued you want to guarantee yourself that the organization you employ can still help you out. With a debt settlement company if one of their clients gets sued there is nothing at all they can do for them. It is UPL (unauthorized practice of law) for these companies to either advise or contact the collector that is trying to sue their client. Now if that same person was the client of a debt relief law firm assisting them to settle their bills the law changes. A law firm by law can still engage in conversation and negotiate a settlement to keep the client from ever having to step into a courtroom. This is a much more favorable avenue for the creditor to get paid as opposed to actually bringing the debtor to court which cost hefty sums of money and time for them.
The next issue of debate involving settlement companies and law firms is how the collection activity is handled. Part of the debt settlement course is the client must go into default in order for the collector to be willing to settle. Now these collectors do not just roll over and play dead, you will for sure be getting collection calls to some extent. A debt settlement company can’t do a thing about the collectors calling. But a law firm can issue a statement of attorney retention to make the collectors by law to deal only with the law firm and not the client in in an attempt to collect the debt.
One more subject to consider is that law firms have to be subjected to a higher authority in order to stay in business, the State Bar Association. This gives the client additional peace of mind that they will be represented appropriately throughout the debt settlement procedure. A debt settlement company must answer to no one.
Steve Bis is a credit card debt analyst with the US Consumer Advocate, which practices in credit card debt reduction.
- Steve Bis
This entry was posted on Sunday, November 22nd, 2009 at 9:11 pm and is filed under Finance. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.
