Facing debt that has gone into collections can be a stressful situation and it is tempting to ask for help from a lawyer. However, it is important to never blindly trust a law firm or deb settlement company – do your research first.
Unfortunately, there are debt settlement companies and law firms looking for a quick buck that make big promises but actually make your financial situation worse. Read on to find out what you need to know about hiring a lawyer to handle your debt settlement, what the risks are and when an attorney can be of help.
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Debt Settlement Companies Are Not Law Firms
The first thing to be aware of is that debt settlement companies are not law firms. These are businesses that may represent you and negotiate on your behalf with a collections agency but they may not practice law.
A debt settlement company may collaborate with lawyers and inform their clients that the business is lawyer-backed. However, if the company limits your interaction with said lawyer and does not promise legal representation if the case goes to court, then the actual involvement of the lawyer is questionable.
In short, be wary of debt settlement companies and sketchy lawyers that make big promises on getting money back from a debt collections agency. The fact is, there is a maximum amount of money that a person in debt can get back from a debt collections agency.
If a debt collections agency has been found to have violated the guidelines of the Fair Debt Collections Practices Act (FDCPA), the debtor may be awarded a maximum of $1000 in damages. Note that this is a maximum amount and will only be awarded after significant proof of wrongful action has been presented in court.
Also, keep in mind that the lawyer representing your case is entitled to a percentage of those damages. In short, there is little money to be earned from taking a debt collections company to court and it likely won’t help your own debt situation.
Perform a Background Check on Lawyers
Lawyers are licensed law practitioners and must work under the strict industry guidelines. So, whenever you contact an attorney they should be able to present their license.
It is also worthwhile to do a quick online background check of the lawyer to make sure there are no signs of misconduct. The law firm should also have a good reputation and be a registered business.
A few warning signs are lawyers that are difficult to contact or locate. Reputable attorneys have an office and their professional background should be easy to track.
When A Lawyer Is Helpful for Debt Settlement
It can be intimidating to negotiate with a debt collections agency so in certain situations it can be helpful to consult a lawyer. However, a good lawyer would offer services beyond simply negotiating a settlement on your behalf.
A good debt settlement lawyer would first asses your financial situation to determine whether a settlement is the best option. They might suggest other options such as filing for bankruptcy or find that there are mistakes in the calculated debt, too.
A good debt settlement lawyer would also be your legal representation if the case goes to court. This might happen if the creditor sues the debtor or if the creditor has been found to violate the FDCPA.
When looking for a debt settlement lawyer, check their credentials and make sure that they are thorough in their job instead of just looking for a quick pay day. Remember that unless the attorney is working pro bono, there are legal fees to be paid.
Thus, hiring a lawyer is not always the most economical choice when facing debt collections. Make a balance of what the costs are of hiring a lawyer, the benefits of having a lawyer on your side and what it would take to attempt negotiating a debt settlement yourself.