First lets identify what debt settlement is. Debt settlement is a process of defaulting on unsecured credit card bills to then later on negotiate a settlement to pay back the original balance at a much smaller amount. This procedure can save a U.S citizen close to 50% of the debt they owed. In addition they can look forward to becoming completely free of unsecured debts within 2-3 years. Now the debt settlement process can be done two ways, either employ a debt settlement company or a credit card debt relief law office to enroll you into a credit card debt settlement programs. This brief article will delve into the differences between the two.
Like most things in life credit card debt settlement has it’s ups and downs. The pros being the tremendous savings of money and time. The negative things are falling past due on the debts, collection calls and the possibility of a lawsuit. A debt settlement law firm has different securities to offer than the fly by night debt settlement company.
A lot of debtors’ major worry is that of being taken to court for a lawsuit. To begin I want to let everyone know that it is not the norm for the collectors to sue, but it is a possibility. Over ninety percent of consumers who fall into default will never find themselves getting summonsed to go to a courtroom. However in the case that you are being sued you want to ensure yourself that the company you employ can still assist you. 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 (unlicensed practice of law) for these companies to either advise or contact the creditor attempting to sue their client. Now if that same consumer was the client of a debt relief law firm helping them to settle their debts the legislation is different. A law firm by law can still contact and negotiate a settlement to keep the client out of court. This is a much more liked method for the creditor to get money in contrast to actually bringing the debtor to court which cost money and time for them.
The next topic of debate involving settlement companies and law firms is how the collection activity is taken care of. Part of the debt settlement course is the debtor must go into default in order for the creditor to be in position to want to settle an account. Now you must take into consideration these creditors are not just going to go away, you will for sure be receiving collection calls to some level. A debt settlement company can’t do a thing about the collectors attempting to collect the debt. 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 issue to think about is that law firms must report to a greater authority in order to continue practicing law, the Bar Association of that attorneys’ state. This ensures the client a greater peace of mind that they will be represented properly throughout the debt settlement process. On the other hand a settlement company answers to no one but itself.
Steve Bis is a debt analyst with the US Consumer Advocate, which practices debt relief.