There are several types of debt lawyers out there. Some are there to help you get out of debt, while others are there to pursue legal action against you to collect what you owe. The three types are debt collection attorneys, debt consolidation attorneys, and bankruptcy attorneys. The purpose of this article is give consumers some helpful information and hints about a) when to worry if your account is with a debt collection lawyer; b) what the advantages and disadvantages of using a lawyer for debt consolidation; and c) what to look for in a bankruptcy lawyer.
Credit Card Collection Attorneys
Unbeknownst to many consumers, just because your debt is being collected by a law firm it doesn’t necessarily mean that you are going too sued in court for the balance. Although this may be a possibility, there are a couple circumstances when this may not be the case:
- Your credit card debt is being collected by attorney that is not licensed in your state – Many collection law offices collect debts nationally and cannot pursue you in court since they are either not located in your state or they are not licensed there. Some common national collection lawyers are Wolpoff & Abramson, Mann Bracken, Zwicker & Associates, Blatt Hasenmiller Leibsker and Moore, and James West to name a few. Keep inmind if they are located in your state or have offices there, they can pursue your debt in court, however.
- The attorney is licensed in your state, but they believe that pursuing legal action against you is pointless, either because you have no income, assets, or you are protected under the laws of your state from judgment execution – Before a creditor files a lawsuit against a debtor in court, they will typically review the person’s case to see whether doing so makes financial sense. When a debtor is sued and has a judgment entered against them in court, the attorney will usually go about collecting on the balance in one of three ways—wage garnishment, levying of your bank account, or putting a lien on your home or property. If after evaluating your situation, the lawyer determines you have no income, assets, or both of these are protected by your state laws, pursuing a judgment in court may not make sense to them. After all, what’s the point of wasting their time and money if it will not increase the likelihood of collecting on the debt?
There are two types of debt consolidation law firms: ones who offer debt management plans (DMPs) and ones who offer debt settlement or debt negotiation services. In the vast majority of cases, using a lawyer for these types of programs rarely makes sense.
In the case of debt management plans, why use an attorney when there are non-profit debt organizations who can help you for substantially less? Many of these credit counselors are industry-accredited, and as we learned recently from the Maryland Attorney General, being a licensed attorney does not necessarily mean you have the best interests of consumer in mind.
In terms of using debt settlement or debt negotiation lawyers, this also rarely ever makes much practical sense. The reason is simple: unless they are licensed in your state, they cannot represent you in court in the event you are sued by a creditor. When you factor in that their fees are typically substantially more than those charged by regular settlement companies (as well as more up front in many cases), it simply doesn’t add up in the favor of the consumer. There are some debt settlement attorneys who have 10 percent of the debt as an up front, non-refundable retainer fee. This is double what the typical negotiation service charges as a set up fee, and as we have learned, working with a settlement attorney does not necessarily ensure legitimacy.
First, when seeking the best attorney to help you file bankruptcy, you should first ask yourself
a) should I even declare or are there other options available to me that can alleviate my debt burden more effectively and
b) can I file on my own?
For consumers who have are having problems with unsecured bills like credit cards, hospital bills, collection agency accounts, and balances from repossessions, there are a wide array of options available to you. For people who are at least considering bankruptcy, it is probable that debt settlement or negotiation is a suitable option. In this type of service, a consumer makes payments into a savings account, which is eventually used to settle their credit card bill in one lump sum payment. In cases where negotiations are successful, a consumer can save up to 40 to 60 percent off their balances, and everyone wins—you save money and the creditor gets at least a portion of their debt back. To get matched with a debt management company, simply fill out a form and PayingPaul.com will direct you to a leading service today!
In terms of whether or not you can file on your own, a lot depends on how routine your case would be. For example, if you have very little assets and your debts are all unsecured, chances are a self-help book (Nolo’s How To File Chapter 7 Bankruptcy is only $20) and a lawyer to answer to any questions you may have ($100 per hour in most states) should do the trick. Compared to the thousands of dollars you would have to pay for a lawyer to file your case, the savings can be tremendous.
For more complicated, seeking the help of a bankruptcy attorney may be worth it, however. In light of this, here are some simple tips for when you do seek the help of a lawyer:
- Shop around and compare rates – Contracting the first lawyer you speak to rarely makes sense. A good resource to find bankruptcy lawyers is in the YellowPages. Call around and see who offers the best deal.
- Get a referral – Do you know anyone who has filed bankruptcy before? If so, don’t be afraid to ask them who they used and whether they were satisfied with the results.
- Don’t be cheap – If your case is complicated and asset protection is important, you shouldn’t compromise quality for price. This is too important of a financial, debt decision to base everything on price.
Not sure that bankruptcy is your best option? Let PayingPaul.Com match you with a debt consolidation service for a free consultation today!