Bankruptcy Lawyer vs. Debt Settlement Company
If you’re feeling overwhelmed by your debts, it can be difficult to know where to turn. Unfortunately, self-styled "debt settlement" companies often take advantage of the vulnerabilities of struggling families and collect hefty fees without delivering the promised relief. In fact, many people end up in a worse financial situation after working with one of these businesses.
For this reason, it’s undeniable that a debt consolidation attorney is the superior option. Read on to learn more about how a skilled debt settlement lawyer can best represent your interests when you are trying to find a way to make ends meet. And don’t pay a single penny to one of the companies if you haven’t discussed your options with an attorney.
What Do Debt Settlement Companies Do?
Debt settlement or “relief” companies are for-profit businesses that claim they can reduce your balances by negotiating with your creditors on your behalf. However, there are significant risks involved in working with one of these agencies.
According to the Consumer Finance Protection Bureau, dealing with these companies can be perilous. In part, this is because these businesses charge substantial fees that you must pay before they deliver any of the relief they promise. If your creditors refuse to negotiate with them, which they often do, or they are unable to settle your debts, you won’t get a refund. And even if they manage to negotiate a debt settlement agreement, you will have to claim the reduction as taxable income on your taxes.
Given the dangers of working with one of these businesses, you should consult with a knowledgeable attorney in your area before you make any decisions about your financial future. A lawyer will be able to advise you on the potential risks involved.
How Do They Work?
Relief agencies often tell you to stop paying your credit card bills while they attempt to negotiate. This can lead to late fees, interest charges, and even collection lawsuits, and can cause significant damage to your credit score.
That’s why many people who put their trust in a settlement company find themselves in worse economic circumstances after hiring one of these businesses. In contrast, a lawyer can help you get the relief you need with no risk involved. For this reason, it’s highly advisable that you discuss all of your options with an experienced attorney.
Pros and Cons of a Debt Settlement Company
While there is a possibility that a financial relief company can help you lower your balances, unlike working with a lawyer, there is no guarantee, and the cons strongly outweigh the benefits.
Some of the negative aspects of working with a settlement company include:
High, non-refundable fees that must be paid in advance.
Late fees, interest charges, penalties, and lawsuits.
Significant damage to your credit score.
No guaranteed financial relief.
Many of these businesses are scams that don’t provide any services at all.
Be sure to consult with a trustworthy attorney before you give your money to any business that claims it can reduce or eliminate your debts.
Why Is Filing For Bankruptcy a Good Idea?
Unlike a debt settlement company, a bankruptcy lawyer can help you obtain permanent and comprehensive debt relief. If you qualify for relief, you can take advantage of U.S. bankruptcy laws, with no risk involved, and an attorney can help you eliminate most of your debts by filing for bankruptcy.
Additionally, while a debt settlement company cannot block existing lawsuits or wage garnishment, when you file for bankruptcy, the court will immediately issue an automatic stay-stopping them.
At DebtStoppers, we believe that you shouldn’t have to worry about paying an attorney when you’re already dealing with mountains of bills. That’s why we are one of the only law firms in the country that offers truly $0 upfront Chapter 7 legal representation from a knowledgeable lawyer
Contact DebtStoppers today to schedule a free conversation with a skilled debt lawyer near you. You can discuss your situation with a qualified attorney who will help you decide on the best course of action to get the relief you need to get your finances back on track.