Who gives me extra protection a debt settlement law firm or debt relief company?
First lets recognize what debt settlement is. Debt settlement is a process of going past due on unsecured credit card debts to then later on negotiate a settlement to pay back the original debt balance owed at a much lower amount. This avenue can save a U.S citizen upwards of 50% of the debt they have to pay back. Plus they can expect to become completely free of unsecured debts within two years. Now the debt settlement process can be done two ways, either employ a debt settlement company or a debt reduction law office to enroll you into a debt settlement program. This brief article will delve into the differences between the two.
Like anything else in life debt settlement has it’s positives and negatives. The good thing is the incredible savings of money and time. The negative things are falling behind on the debts, collection activity and the small chance of being sued. A credit card debt relief law firm has extra protections to offer than the standard debt settlement company.
Lets first understand the risk of getting sued. To begin I want to let everyone know that it is not common practice for the creditors to sue, but there is a chance. Over ninety percent of consumers who go into past due status will never end up getting summonsed to go to court. But you want to make sure that if it does happen to you that you are not left out to dry. With a debt settlement company if one of their customers gets sued there is nothing at all they can do for them. It is UPL (unauthorized practice of law) for these companies to either offer advice or contact the collector that is trying to sue their client. Now if that same individual was the client of a debt reduction law firm assisting them to settle their debts the legislation is different. A law firm by law can still contact and negotiate a settlement to keep the client out of court. This is a much more favorable method for the collector to get money in contrast to actually bringing the debtor to court which cost hefty sums of money and time for them.
The next subject of debate involving settlement companies and law firms is how the collection calls are taken care of. Part of the debt settlement course is the consumer must fall past due in order for the collector to be offering any kind of settlement. Now ofcourse your must understand these creditors are not just going to go away, you will assuredly be receiving collection calls to some level. A debt settlement company can’t do a thing about the creditors calling. But a law firm can release to them an attorney retention letter to make the collectors by law to speak only with the law firm and not the client in terms of collecting the debt.
One more subject to think about is that law firms have to answer to a superior authority in order to continue practicing law, the State Bar Association. This gives the client additional peace of mind that there case will be handled properly throughout the debt settlement process. A debt settlement company must answer to no one.
Steve Bis is a credit card debt analyst with the US Consumer Advocate, which practices in credit card debt reduction.
- Steve Bis
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