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When is It Time to Speak to a Debt Settlement Lawyer?

— August 19, 2020

Instead of thinking about bankruptcy as a solution, you should try the debt settlement procedure to fix your finances and have peace of mind. 

Typically, there can be many reasons why you may be grappling with loads of debt. Whether you’re too liberal with your credit card use or finances you can’t control, such as medical bills or home repairs, you may put yourself in a position wherein you can no longer pay all your debts in time. 

Because of this, your primary recourse would be to enlist the assistance of a debt settlement lawyer to help you fend off creditors and erase some of your outstanding monetary obligations. However, not all debt situations require the services of a lawyer. This is primarily true if you’re still working out some arrangements for your debts without resorting to certain legalities. 

Thus, if you’re looking to know everything about debt settlement, including the perfect time to call a debt settlement lawyer, keep reading this article to learn more information. 

What is Debt Settlement and How Can It Benefit You?

Dealing with many personal debts can be overwhelming, but offloading some of your obligations can seem like a daunting experience. This is where the process of debt settlement comes into play. Primarily, debt settlement refers to an agreement entered between a lender and a borrower to make a one-time payment of an existing debt balance in exchange for the wiping out of the remaining debt. 

In other words, it’s a debt repayment strategy wherein you have to negotiate with your creditor for the approval of your partial payments as satisfaction for the outstanding balance. When the creditor agrees, you need to pay a percentage of the balance, and the remaining is forgiven for good.

The word debt and an eraser
The word debt and an eraser; image courtesy of alancleaver via Pixabay,

Moreover, if you’re considering debt settlement to get out of your debts, below are the benefits you can gain:

  • Get relief from debts – If you’re struggling to pay back what you borrowed, a debt settlement process can be beneficial. In most cases, you might experience sleepless nights and high stress levels, thinking about how you can pay off your debts. But, by settling your obligations with your creditors, you’ll get some mental relief in the end. 
  • Repay debts in less time – By entering into a debt settlement agreement, you can pay your obligations in less time, which is, probably, two to four years. Normally, it may take more than five years to pay off your debt if you stick with the original repayment schedule. 
  • Pay a much lower amount – When you enter into a debt settlement process, you’re able to pay a reduced amount than what you originally owed. As a result, you can save some money in the long run. 
  • Save your credit rating – Bankruptcy can be one of the options to relieve yourself from loads of debts, provided you determine how much debt you need to file one. However, doing so can affect your credit rating for a decade. Because of this, debt settlement is always better than filing for bankruptcy because it enables you to pay your debts without causing harm to your credit. 
  • Prevent creditors from chasing you – By engaging in a debt settlement procedure, you’ll no longer be chased by the creditors who are part of the negotiation. In other words, they waive their rights to run after you once the settlement process is completed. 

When Should You Speak to a Debt Settlement Lawyer?

As mentioned, facing a lot of debts is never easy, especially if you don’t have enough financial resources to pay them. Fortunately, there are ways to minimize the legal risks, and one of these is hiring an experienced debt settlement lawyer to assist you with the process. 

Below are some instances wherein having a legal professional by your side can make a lot of sense: 

  • You Owe A Large Amount Of Debt 

Again, not all monetary obligations require a lawyer to settle them. However, if you’re dealing with a large amount of debt, such as USD$20,000 or more, that’s a different story. You might have a hard time negotiating a debt settlement agreement with the creditors due to the amount involved. 

Hence, if you think it’s best to have someone experienced in debt settlement, work with a lawyer to get started with the process. For instance, the dedicated legal professionals from McCarthy Law PLC can assess your current financial situation and determine the best options to cut down your debts in less time. 

  • Your Wages are Being Garnished

In extreme cases, your creditors can run after your wages when you fail to pay off your debts for a long time. For example, if you secured a loan from a banking institution, but you became a delinquent borrower, the bank can file a case and petition for your wages to be garnished as soon as possible. 

If that’s the situation you’re in, it makes sense to hire an attorney to assist you. Generally, wage garnishment comes with many negative effects. These can include termination from work, lower credit scores, and a higher percentage of the garnished amount. Due to these instances, it’s best to let your lawyer handle this legal matter. They can develop the best ways to prevent the garnishment of your wages for the payment of your debt. This is where a debt settlement procedure comes to the rescue. 

Thus, if you have a significant amount of debt, you can opt to enter into a debt settlement process with your creditors to avoid wage garnishment and other serious consequences. Aside from representing you in all court proceedings, they can also build a dialog with the creditors and try to negotiate a settlement agreement that both parties can benefit from. 

  • The Creditor Sues You

Just like the consumers, the creditors from whom you borrowed money are protected by law. When you fail to pay your debts within a certain period of time, they might be entitled to sue you in court. This is to protect their rights and ensure that they can get back the money you owed them. 

When this happens, you should consider bringing a debt settlement lawyer on board to handle the legalities of your situation. They know exactly how to navigate money-related cases. From paperwork to creating a defense strategy, they know what to do to ensure a favorable judgment for you. Remember, the lawsuit filed by the creditor can be complicated, which is why you need someone who is knowledgeable about how these cases work to protect your rights and interests. 

  • You Consider Filing For Bankruptcy as an Option

Sometimes, there might come a point wherein you think that payment of your debts is a hopeless case. As such, you might consider the option of filing for bankruptcy to get rid of your financial agony. While it can be the easiest solution to wipe out all your obligations, it carries some serious consequences. It’s not only expensive, but the record of bankruptcy can impact your credit score for several years. 

Moreover, when you file for bankruptcy, your future ability to borrow money from other creditors might be negatively impacted. Therefore, if you want to avoid that financial fate, it’s good to have a debt settlement lawyer who can provide you with other options. Typically, they’ll analyze your current financial resources, including your income and other assets, and determine the possibility of settling your debts with the creditors. By doing this, you never have to think about filing for bankruptcy as a viable option. 

As you can see, there can be numerous ways a debt settlement lawyer can help your case. However, if you’re hesitant about hiring one, schedule some free consultations with the local legal professionals in your area. Spend some time to sit down with them and know what they have to say. That way, you’ll figure out whether your unique situation requires the services of a lawyer. 

Thankfully, many law firms are operating online, thereby making the hiring process much smoother and faster. This is what SEO for lawyers can do for your search. With a good SEO strategy, prestigious law firms can improve their online presence and make their organizations more active virtually. 

How Can You Start With the Debt Settlement Process? 

Now that you know the instances in which you can hire a lawyer, it’s time to get familiar with how the debt settlement process really works. Generally, there are many ways to start the procedure. You can talk to your creditors, state the amount you can afford to pay in order to settle your debts, and wait for their response. 

However, this isn’t as easy as it seems. With the legal implications associated with debts, you need to follow the steps mentioned below.

  1. Ask the Collection Agency to Stop Calling

When you’re a delinquent borrower, chances are you’ll receive a lot of creditor phone calls every day. However, even if you opt to ignore them, they’ll not stop until you answer and settle your monetary obligations. 

Under these circumstances, it’s a smart idea to find a lawyer to obtain legal representation. Usually, the collection agency will stop contacting you directly when they know that a lawyer legally represents you. So, if you want peace of mind, ask a lawyer’s assistance to make things much easier for you. 

  1. Validate Your Debt

Validating your debt will allow you to know how much you owe to your creditors. Not only that, but you’ll also have an idea as to whether you can afford to pay the entire amount or not. For this reason, you should obtain verification of your debt to start the negotiation process and get your obligations settled immediately. 

Once you validate your debt, speak to your lawyer to come up with the possible defenses you might have against your creditors. 

  1. Start Negotiation with the Creditors

After calculating the amount of money you can pay your creditors, you can ask your legal counsel to represent you in the negotiation process. At this time, your lawyer can think of ways to negotiate and settle your debt in the soonest time possible. 

By negotiating your debt down, you’re also thinking about your creditors’ interests. When you file for bankruptcy, you leave them with nothing because your debt is discharged. If you try to settle a lower amount of debt, your creditors can be able to get back some part of the money in your loan while you fix your debts in no time. This can be a win-win scenario both for you and the people to whom you owe money. 

  1. Save Money for Your Debt Settlement

At the start of the settlement process, your lawyer will advise you to create a savings plan based on your capacity to pay your debt. For example, you can set aside a dedicated account until you reach the amount of money for your lump sum payment. 

Since the debt settlement process might take at least six months, you have enough time to accumulate the agreed payment for your debt. But, in doing so, let your lawyer check the agreement and determine if it protects your interests in the whole process. 

  1. Accept the Settlement Offer

During the last part of the negotiation, your creditors will ask for enough time to investigate your circumstances. They’ll conduct some investigations to know how bad your financial situation is. Once they determine your inability to pay, they might decide to consider your request and send a settlement offer. By this time, it’s best to accept the offer because it’s your only opportunity to make things right and get back on track. 

  1. Pay Your Creditors

Lastly, you should pay your creditors once you accept the offer. At this point, you’re expected to complete the agreed settlement money to finalize your debts. After making the lump sum payment, you can now reassess your finances and improve your financial situation. 

Final Thoughts

With the information presented above, there’s, indeed, a way out of your overwhelming debt. Instead of thinking about bankruptcy as a solution, you should try the debt settlement procedure to fix your finances and have peace of mind. 

Hopefully, you find this article useful and informative in understanding how debt settlement works and how a lawyer can help you navigate this situation. 

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