Should you trust a debt settlement attorney for handling credit card debts?

If your monthly loan payments and high credit card bills are overwhelming you, there is a solution that can help you lower the amount you owe. You can try managing those payments without getting help from others. You may seek financial help from different financial institutions, your family, friends, and from others to pay off debts. But sometimes, these situations become impossible to handle on your own.

Many experts suggest that you should consult an attorney to handle your case and lower your debt amount. But, can you trust a debt settlement attorney with your credit card debts? Unpaid credit card bills might charge a lot in fees and penalties. In some cases, a creditor may sue you if you can’t pay. So use caution when trusting a third person to handle your credit card debts.

Before hiring an attorney, make sure to do your research and take these factors into consideration.

Can a debt settlement attorney handle your credit card debts?

Yes, a debt settlement attorney can manage your credit card debts on your behalf. Once you hire an attorney, he or she will negotiate with your creditors and lower your payoff amount.

When do you need an attorney to handle your credit card debts?

Credit card debt is an unsecured debt that you should pay off every month on time. However, a large debt burden that you can’t pay every month could land you in a critical financial position.

It might be helpful to consult a non-profit consumer credit counseling company. They can help you create a budget and manage your financial hardship.

After working with a professional credit repair specialist, assess your financial situation. If you are still having issues paying off your credit card debts, then you may opt for a debt settlement attorney. They can negotiate with your creditors, consolidate your debts, or set up a payment plan. Your attorney can suggest the right strategy to manage your debt and minimize your legal risks. The attorney will also offer guidance on improving your credit score after reducing your debts.

A debt settlement attorney will help you avoid bankruptcy and provide easier options to settle your debts while maximizing savings. After all, the goal is to prevent spending more than what you have on credit card debts. The perfect time to seek counsel from an attorney is when you are considering bankruptcy. Another good time to contact an attorney is when an aggressive creditor is using inappropriate means and abusive behavior to collect the debt, or violating legal rights.

What should you expect from a debt settlement attorney?

Once you hire a debt settlement attorney, he or she should carefully go through your credit card information. The attorney should check your due dates, past-due accounts, and analyze your total debt amount. An attorney should negotiate with your creditors to lower the amount you owe.

Credit card debts are a big risk for creditors. That’s why they are willing to negotiate to recover as much of the debt as possible. It is the main reason most debt settlement attorneys can successfully negotiate with the creditors. However, there is no guarantee that an attorney will successfully reduce your debt amount. But, you will have a greater chance of settling your debts and saving a lot of money.

An expert attorney can give you legal advice once he or she analyzes your situation. The attorney should have at least three years of experience handling credit accounts. They are experts in negotiating terms with creditors and have knowledge of the debt collection process. An attorney can also represent you if a creditor files a lawsuit against you.

Apart from that, if a creditor or debt collector violates any state law regarding credit card debts, your attorney can help you defend yourself.

How much should you pay a debt settlement attorney?

Once you hire an attorney and opt for their services, they may charge you based on contingency. This means they won’t charge you any money upfront. Instead, they might charge a percentage of your total debt amount or a percentage of the total saved money after settlement. The attorney might charge based on your location and the total credit card accounts they are managing. 

Types of attorney fees:

  • Fee on the total debt amount
  • Fees based on total money saved
  • A flat fee for every credit card account they handle
  • Fee per hour

Things to remember when hiring a debt settlement attorney for managing your credit card debt

Stay away from bad attorneys

You should choose a licensed attorney who maintains strict ethical standards. But sometimes, few debt settlement companies hire attorneys to work on their behalf and provide debt settlement services. They also charge upfront fees and many other hidden charges for the sake of legitimacy. So, how can you avoid them? Ideally, you should meet a local attorney in person and speak to them directly. This will help you to choose a good debt settlement attorney and avoid a bad one. Schedule a meeting to discuss your credit card debts. Check out whether or not the attorney will deal with creditors directly and negotiate terms. You may find some companies that offer you debt settlement services, but don’t allow direct discussions with the attorney. This is a red flag to move on. Check out online reviews and local listings before hiring an attorney. Ask your friends and colleagues, neighbors and family members for their recommendations. Once you meet one, get everything in writing before signing a contract with the attorney. 

Remember probable tax implications

Settling your credit card debts can help you save a lot from your debts owed to creditors. The amount saved will be treated as income according to federal law. The IRS usually considers $600 or more saved from debt settlement as taxable. So the more you save, the more it will increase your tax liability. 

Author Bio: 

Lyle Solomon has considerable litigation experience as well as substantial hands-on knowledge and expertise in legal analysis and writing. Since 2003, he has been a member of the State Bar of California. In 1998, he graduated from the University of the Pacific’s McGeorge School of Law in Sacramento, California, and now serves as a principal attorney for the Oak View Law Group in California.


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