Should I Hire a Lawyer for Debt Settlement?

Consumers may want to hire a lawyer for debt settlement to help negotiate with creditors and protect against further lawsuits.

What is Debt Settlement?

Debt settlement occurs when a creditor and borrower reach an agreement where the borrower has to pay less than they owe. This means that creditors will no longer hound borrowers for the money they owe and borrowers will not be at risk of getting sued over the unpaid balance.

Although this seems like an ideal situation, there are risks associated with debt settlement. Settling a debt can have significant effects on a borrower’s credit. A debt settlement can also take a long time to be reached, often between two and four years. Settling debt can be expensive when you factor in the costs, fees, and taxes.

In some cases, debt settlement is offered through third parties, but nerdwallet.com warns that these services may come with additional risks.

Should I Hire a Lawyer for Debt Settlement?

Hiring an attorney to help with debt settlement may be a good idea. In a situation where negotiation is required, an experienced lawyer can help ensure that a consumer’s rights and interests are protected. Using a lawyer for debt settlement also helps the consumer negotiate the best possible deal with creditors.

While a lawyer can be extremely valuable, it’s important to make sure that person is experienced and qualified in this specialty. Some debt settlement companies may hire people to act as lawyers who are not actually qualified, resulting in consumers getting taken advantage of.

If a consumer has already gone through the debt settlement process and feels they may have been taken advantage of, it may be worthwhile to speak with a lawyer skilled in debt settlement.

Many consumers report feeling deceived by debt settlement companies. For example, some consumers have claimed that companies that promised to provide a loan for debt consolidation instead coerced the consumer into signing up for debt settlement services that harmed their credit.

Other consumers claim that debt settlement companies violate a variety of consumer protection laws including:

• The Fair Credit Reporting Act (FCRA): A federal law which regulates how companies can collect credit information and how consumers can access their credit reports.
• The Credit Repair Organizations Act (CROA): A law protecting consumers from debt consolidation companies that charge money to improve credit scores.
• Other: State laws also provide additional protections against unfair and deceptive practices.

A debt settlement lawyer may be able to help consumers with these problems if debt consolidation and settlement companies violate these laws. In some cases, taking legal action can result in monetary compensation, penalties for unlawful behavior, and damages for financial injury.

Join a Free Debt Consolidation Class Action Lawsuit Investigation

You may qualify for this investigation if a debt settlement or credit repair company did one of the following:

• Sent a loan offer or offered credit, rejected your application, and then pitched their debt program;
• Required payment for credit repair services up front and you were not provided with a full disclosure in writing; and/or
• Promised to help but left you in either the same or worse financial condition.

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This article is not legal advice. It is presented
for informational purposes only.