Falling behind on debt payments can happen to anyone – medical bills, job loss, divorce, you name it. And when those minimum payments start piling up, it can feel totally overwhelming. You may be tempted to just ignore the problem, but that can make things way worse in the long run if creditors sue you or trash your credit.A debt settlement attorney could be a big help in getting you back on track financially. They know all the laws and loopholes to reduce what you owe and work out easier payment plans. It takes tons of stress off your plate so you can focus on the rest of your life.I chatted with John Smith, a debt settlement lawyer for over 20 years in California. He said there’s 4 main times when his clients reach out:
1. You’re Getting Sued by Creditors
If you’re already getting court notices or letters from a lawyer demanding payment, then stop everything and call a debt settlement attorney ASAP.“By the time a creditor sues, they’ve usually given up on trying to collect normally,” said John. “They want to force you to pay through legal action instead.”And here’s the thing — these lawsuits are rarely just threats. Creditors fully intend to get judgments against you for the full amount owed plus interest and legal fees. This allows them to garnish your wages, put liens on your property, empty bank accounts, etc.Not fun.But a good debt settlement lawyer can step in and negotiate with the creditor’s attorney. “We have legal methods for dismissing cases due to technical errors or buying more time so accounts can be settled for less than owed,” John explained.I can personally vouch for how scary it is to be sued over debt. If you’re getting legal notices, getting an attorney should be priority #1 before things spiral out of control!
2. Debt Collectors Won’t Leave You Alone
Under the Fair Debt Collection Practices Act (FDCPA), collectors have to treat you fairly and respectfully. No harassment, threats, calling at odd hours, etc.But some break the rules anyway because people rarely know their rights. As John put it:
“Many debt collectors rely on bullying and intimidation tactics to pressure people into payments they can’t afford. But through legal action, we can force them to back down and negotiate more reasonable settlements.”
Common offenses he sees are nonstop phone calls even after requesting no contact, calling employers or family about the debt, failing to verify what’s owed, and falsely threatening legal action. Each violation can lead to the collector owing you $1,000+ in statutory damages.If you feel abused, trapped, or lied to by collectors, talk to an attorney before paying anything more. Debt settlement lawyers are well-versed in consumer protection laws and how to bring collectors in line.Plus negotiating with someone legally representing you usually makes them more cooperative. Win win!
3. You Have Good Income But Lots of Debt
Now if your debts are with the original creditors (not collectors) and you still have decent income coming in, debt settlement may also be an option. This route is a bit riskier credit-wise but can slash what you end up paying.The attorney essentially negotiates lump sum payoffs with creditors for less than the full balances. It depends on factors like how long the accounts have gone unpaid, how much you can scrape together, etc.John says it’s common for his clients in this situation to settle credit card debts for 40-60% less:
“When an account gets behind enough that the creditor charges it off and closes it, they often decide getting something is better than nothing. They’ll take a reduced lump sum payment in exchange for forgiving the rest.”
The risk is that your credit score tanks from the late payments while the attorney negotiates (often 12-15 months). The accounts likely won’t fall off your credit reports for ~7 years either.So this strategy works best for those who don’t plan to utilize credit much in the near future. You avoid bankruptcy but take a hit on your score either way.
4. You Have More Debt Than You Can Ever Repay
Finally, if you honestly have no chance at paying back what you owe in a reasonable timeframe, a debt settlement attorney may still help reduce the fallout. This is kind of a last resort before exploring bankruptcy.The lawyer can negotiate payoffs of a smaller percentage owed when creditors get desperate enough. While the unpaid remainder still legally exists, creditors rarely keep pursuing once accepting a settlement.John explains that consumers with lots of debt and very limited income have options:
“Bankruptcy ruins your credit for 10 years and can cost thousands in legal fees. Debt settlement done right can resolve unpayable debts for less money while allowing people to rebuild credit in just a few years.”
Just know that collectors will be very aggressive until settlements are reached. Lawsuits are likely as well. So mentally prepare yourself!Having an experienced debt settlement attorney in your corner can ease the stress a bit. Just weigh all your options carefully before deciding anything.Alright, hopefully this gives you a better idea of when to seek help from a debt settlement lawyer! They can be total lifesavers in the right situations. To recap:
- Getting sued by creditors
- Abusive debt collectors
- Good income but lots of debt
- More debt than you can ever repay
If any of these sound familiar, at least schedule a free consultation with someone like John. Learn what strategies could improve your financial situation. Don’t just ignore the problem and hope it goes away (it won’t!).