Debt Settlement Law Firms: Understand How They Work
Debt settlement is usually preferred to bankruptcy, but the decision leads to another issue – who to get to negotiate the settlement? Increasingly, debt settlement law firms are preferred over companies. But why?
The most common option is to go for debt settlement companies, and there are many to choose from. But, there are clear advantages to choosing a law firm to negotiate and represent a debtor. And if the debt settlement agreement means saving money and being legally protected too, then it is hard to ignore.
Why Debt Settlement Is A Solution
It might seem that agreeing a settlement is not going to make that great a difference. But settlements of as little as 30% of the actual sum owed can be achieved. So, a $10,000 balance is cleared with a single payment of $3,000, and whether the debtor goes through a debt settlement law firm or company, this is a great deal.
When dealing with overall debts of $100,000 or more, the challenge is to secure a deal that can see the debt repaid gradually over a given period of time – for example 10 years. Debt settlement companies and law firms will negotiate with creditors to agree the overall figure, and then set an austerity structure that will see the debt cleared on time.
The main advantage of setting about dealing with the debt problem through debt settlement, of course, is that significant savings can be made while alleviating the financial pressure. What is more, the effect it has on a credit report is less damaging than bankruptcy since some of the debt is paid.
Law firm Vs Company: The Key Differences
So, why choose a law firm to handle the task of taking control and clearing mounting debts? Are they really the better choice? In many ways they are, as the differences between how debt settlement law firms and companies are quite stark.
The key difference is that a law firm can be hugely effective when it comes to dealing with the legal intricacies that are often so important when things do not go according to plan. For example, with relation to collection calls, debt settlement companies have little power to counter the tendency for collection agencies to make continual calls.
However, a law firm knows the legal rights of debtors, and can very swiftly put an end to these calls, which are in violation of the Fair Debt Collections Practices Act. So, a law firm can ensure that the debt settlement is conducted properly.
Other areas in which debt settlement law firms hold an advantage include when a creditor decides to exercise their right to sue the debtor for money. Because they are law firms, they can make contact with the creditor and negotiate a settlement.
But debt settlement companies are not permitted to make contact with creditors once legal proceedings have begun. They have no power in the law at all, so would be unable to find a solution in the unlikely event that a creditor did opt for a court appearance.
Finally, the law firm is perfectly positioned to take care of all legal issues that come out of the debt settlement agreement. They are also correctly set up to ensure the best representation, in sharp contrast to companies, which are not always legitimate in the eyes of the law - so they are closed down.
Source: Free Articles from ArticlesFactory.com
ABOUT THE AUTHOR
Devora Witts is a certified loan consultant who helps people get approved for Bad Credit Mortgage Loans and Bad Credit Personal Loans. To get aid with your financial situation you can visit her at http://www.badcreditloanservices.com