When trying to reduce what you owe creditors through debt settlement, one option is to work with a lawyer who can negotiate on your behalf to settle your debts for less than what you initially owe. The first question you may have when considering a debt settlement attorney is how much it will cost for them to negotiate down the amount that you owe. In this article, we’ll dive into what a debt settlement attorney does, how they charge you, and other factors you can use to determine if hiring an attorney is the best way to get your debts reduced.
What does a debt settlement attorney do?
Debt settlement attorneys typically work with creditors to lower interest rates and debt payments so that consumers can eventually settle their debts. Typically, the process of working with a debt settlement attorney will begin with a consultation, during which the attorney will work with you to determine your needs and your desired outcome. After that, the debt settlement attorney should be able to estimate how long it could take for you to settle your debts based on an assessment of creditors’ willingness to negotiate their terms and conditions.
The cost of working with a debt settlement lawyer could be anywhere from $200 to $400 per hour plus expenses, a total which can amount to thousands of dollars.
Do I need a debt settlement attorney?
If you’re worried that you might get sued by a creditor trying to collect a debt, an attorney could have the knowledge and expertise to help you. An attorney could also be helpful if the debt is tied up in bankruptcy proceedings or has been turned over for collection by a third party, such as an agency specializing in debt collections. However, a debt settlement company can be an attractive alternative for those looking to reduce their debt without having to pay the high fees associated with a lawyer. These companies specialize in negotiations with creditors and have likely helped thousands of others in a similar situation.
How much will an attorney charge to negotiate with my creditors?
Just like any other type of attorney, debt settlement attorneys’ fees can vary depending on how much work or how many billable hours are required to complete the desired tasks. Therefore, it is difficult to estimate before work begins how much time it will take and the time can add up quickly. Some attorneys charge by the hour, while others may set flat rates for specific tasks. Debt settlement companies can offer similar services and only charge a percentage of your enrolled debt—typically, 3%–5%. Reputable debt settlement companies will likely have an attorney on staff who oversees and advises on their programs and services, at no additional cost to the client.
Attorney fees depend on what work will be done.
In some instances, an attorney might instruct you in how to perform a specific task yourself, as part of reducing your debt with creditors. While this does help reduce how much you’ll have to pay an attorney, it does mean that you’ll have to perform this work yourself. If you’d prefer to have negotiations and paperwork handled for you, working with a debt settlement company might be a better option for you.
Common attorney fee structures
Some of the typical fee structures that lawyers use in debt settlement are hourly and fixed fees. Hourly rates are often in the $200 to $400 per hour range, while some lawyers may charge by the half-hour or quarter-hour. With a fixed fee, some lawyers will offer a flat rate for a specific task or service they provide as part of their debt negotiation services. It’s also important to note that these lawyers usually can’t guarantee how much they’ll be able to save you. So you could start racking up attorneys fees and then find out they weren’t able to save you as much as you expected.
Debt settlement companies should be able to provide a no-commitment estimate on how much they can save you and how much their program will cost before enrolling in the program. Reputable companies also will not charge any upfront fees.
When Should I Hire a Debt Settlement Lawyer?
Here are a couple of reasons why you might consider hiring an attorney to take on your debt relief.
When filing for bankruptcy
If you’re considering bankruptcy, a lawyer can help you work through the process and file for bankruptcy. A lawyer specializing in bankruptcy law can help you file for Chapter 13 or Chapter 11 bankruptcy protection. When a lawyer files bankruptcy on your behalf, it will also prevent your wages from being taken by creditors. It’s important to note that through this option you would incur attorney fees plus bankruptcy fees. Filing for bankruptcy could also have a significant negative impact on your credit for 7-10 years.
A creditor is suing you
If a creditor is suing you for nonpayment, a lawyer could help make the payment arrangements. This is especially true if you owe back taxes, medical bills, or child support payments. Working with a debt settlement company could also be a good option for you in this situation. These companies could help you reach agreements quicker than going through an attorney, saving you time and money.
Beware of bad debt settlement lawyers!
While there are certain situations where a lawyer can help you get relief from your debt, it’s essential to watch out for shady debt settlement lawyers. Some are scam artists who will take your money and do nothing in return. Here are a couple of red flags: Don’t trust a lawyer who promises to get you a large sum from the court system (if it seems too good to be true, it usually is). And don’t hire an attorney who asks for upfront payment before anything else is done.
How CreditAssociates can help
If you’re looking for debt relief, you should consider a legitimate and established company like CreditAssociates. We offer an experienced team of certified debt consultants who can work with you to create tailored solutions that will fit your needs. Our team will negotiate with creditors to find the best possible deal for your unique situation, and we don’t get paid until you save. Get your free debt evaluation today.
More Common Questions About Debt Settlement Lawyers
Can lawyers negotiate a debt settlement?
Yes, certain lawyers can negotiate a debt settlement with creditors on your behalf. Other options are negotiating with creditors yourself or engaging a debt settlement company to handle the whole process for you. Depending on your situation, working with a company could help you reach agreements with creditors faster and for less than an attorney would charge.
Are debt settlement attorneys worth it?
While hiring a debt settlement attorney might be your first thought, it’s usually best to work with a debt settlement company. The main reason is that law firms often require a retainer fee upfront, which is an amount that you’ll have to pay before the lawyer takes your case. With reputable debt settlement companies, there are no upfront fees, and they’ll handle the entire negotiation process with creditors on behalf of their clients.
Can I negotiate my own debt settlement?
It is possible to negotiate your own debt settlement, but it doesn’t always yield the best results. Debt settlement companies specialize in these types of negotiations and will handle the process for you. They can use their knowledge and power with creditors to help you settle quicker and for less. Reputable debt settlement companies will provide free, no-commitment consultations to determine if they’re the right fit for you.