There are many significant benefits of a legitimate debt settlement program through a law firm, retained to represent the debtor with their creditors, but here are our top six (6). Some of these benefits are, in fact, available through reputable debt settlement companies, but not all. Yet, all of these benefits are necessary for full, comprehensive and adequate representation in negotiating and settling debt with creditors.
People get in debt. That’s a fact of life. But handling that debt when it gets overwhelming is the challenging part. Most people believe that they have two options when it comes to handling debt they are unable to pay: to default on their debt, or to declare bankruptcy. There is, however, another option, and that option is debt settlement.
There are a lot of companies out there purporting to perform debt settlement. There are many good companies, but, unfortunately, there are many more bad companies that do this. The fact of the matter is that most companies are ill-equipped, trained, and experienced to perform debt settlement, and cannot perform the services that need to be dealt with when negotiating on your behalf. That is because they are not lawyers, do not have lawyers, and cannot practice or offer advise as lawyers without being fully licensed by the State Bar.
- Pay a Fraction of the Balance. Debt settlement allows you to pay a fraction of the outstanding balance on your account. This is because creditors know that chances of recovering a debt are slim once it goes into default. Sometimes creditors charge-off the debt and sell it to the secondary market for a miniscule percentage of the balance. Both the original creditor and a debt buyer have an incentive to negotiate a settlement because some return on their investment is better than no return at all.
- Pay Over Time. With a debt settlement company, you are contributing a small amount every single month to an escrow account from which settlement payments are made. If a creditor is unwilling to negotiate a reasonable lump sum settlement, or you do not have funds to pay a lump sum, it is often possible to negotiate a settlement over 3, 6, 12, sometimes 18 or 24 months.
- Protection of a Law Firm. A law firm can protect you from creditor harassment because creditors cannot contact you if they know that you are represented by an attorney. A law firm will advise your creditors that you are represented so that you are not harassed in their attempt to collect your debt. If they break this law they can be sued and an attorney can represent you in an action for violation of fair debt collection practices.
- Fees Are Based on Initial Balance. A law enacted in 2010 called the Telemarketing Sales Rule prohibits debt settlement companies from charging fees based on a final debt balance. This incentivizes companies to settle early. If a fee for debt settlement is based on a contingency – that is, a percentage of savings – it is much better for you to be charged based on a percentage of the initial balance than a new balance after months or years of additional accrued interest and penalties. If, for example, an initial debt is $10,000 and settles for $4,000, there is a savings of $6,000.00. With 1/3 settlement fee, the fee is $2,000.00. If you were charged based on a final balance, and let’s assume that the debt increased from $10,0000 to $12,000 at the time it was settled due to penalties, fees and accrued interest, there would be a savings in this case of $8,000.00, with a fee of 1/3 savings of almost $2,700.00. So, obviously, it makes sense for you, the consumer, to be charged based on savings off initial balance instead of final balance. And no reputable firm will charge you otherwise.
- No Fees Until Settlement. The Telemarketing Sales Rule also prohibits debt settlement companies from charging you until a debt is settled. That means that all contributions you make towards debt settlement should be deposited into an escrow or trust account for your benefit when a debt gets settled. You should never be charged for any account until that account settles with the creditor.
- Peace of Mind. You should have peace of mind with any debt settlement program. You shouldn’t have to worry about harassment, paying debts you’re unable to pay, or even getting sued. Completing a debt settlement program with a law firm has all the benefits of the Telemarketing Sales Rule, debt settlement, and legal representation. You will have peace of mind knowing that collection efforts and harassment will stop, your debt will be settled, fees will only be charged when and if an account settles, and in the event you are sued you will fully represented, or if a creditor violates that law you will have an attorney who can take action to protect your legal rights.
Our firm has significant experience and success with representing clients in debt settlement. We advise creditors of representation and demand that they cease and desist contacting you in their attempts to collect on a debt. We settle for a fraction of outstanding balances owed. I, as your attorney, handle every single matter personally, negotiating settlements, representing clients that have been and are sued by creditors, and pursuing actions against creditors for illegal practices. I have obtained significant settlements and judgments against creditors who insist on violating the law.
If you are behind on your bills, are tired of creditors harassing you for payment of bills you cannot afford, and are considering debt settlement as an option, call the Law Offices of Donald A. Green at (760) 431-5290 for a free consultation to discuss your options.