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Do you have to have a lawyer to perform debt settlement these days?
Recently I have been listening to companies which are informing people who are searching for debt consolidation programs, that now use a law office to manage your case. They say that it's now illegal for organizations which are not law firms to do debt settlement.

This isn't really accurate. The problem is that with companies, such as these law firms, that ask for advance fees for their services. Most all law firms will charge their clients up to a thousand dollars as a retainer. In addition they normally also charge as much as eighty dollars monthly for their legal services.

Let’s take a look at this. You are retaining the services of an attorney. That sounds excellent! Now what precisely are you retaining them to do? Well if you study their legal agreements you're retaining them for the purposes of negotiating your credit card debt. Last time I looked there wasn't any legal paperwork necessary to do that, no courtroom appearances. In fact there's no requirement for a law firm or even a paralegal what so ever to simply negotiate your credit card debt.

Second like I said previously, you're also having to pay a monthly legal fee. What's that for? Well they will tell you they're contacting your creditors telling them that they're representing you. Well what they're doing is just mailing them a power of attorney letter. This mind you most collection organizations file inside the big circular file cabinet. Mailing this notice won't stop collection phone calls. Additionally, they do not tell you this, but they do not deliver this letter to all of your creditors. The reason behind this is that several creditors will promptly send your file over to their legal division for a possible law suit when they receive any such correspondence.

The only real approach to get the telephone calls to totally cease will be to send them a cease and desist letter telling them that you don't intend to pay them the debt and that they're to stop all communications. You can envision what this type of notice will result in. In the event you cut off all potential ways the creditor has to collect the money from you, it'll almost certainly cause them to make use of the court system to recoup some of their debts.
Also, most of these settlement lawyers aren't even doing the work for you. You will find many pending law suits against these law firms proclaiming that every facet of the settlement work is getting carried out by non lawyer for profit companies. Which means you're paying for services of an attorney but an attorney isn't actually supplying you those services.

Now let’s look at how they charge their negotiation fees. Most law firms will charge a flat fee of fifteen to twenty percent of your total debt amount. This payment is spread out within the initial year or two monthly payments you make. Meaning you are paying the law firm for services that they have not really completed. In addition if you are paying them a set amount, where's their motivator to negotiate for the lowest total amount?

Now according to the Federal Trade Commission’s ruling established October 27th an attorney can't charge any upfront fees except if the customer has a in person meeting with the attorney that would be handling the case. This doesn't imply that you walk into an office building, shake hands with a lawyer, then have a paralegal hand you paperwork to sign. This meant that the actual lawyer that you talked with, would go over the important points of the program along with you at that time. And that attorney will be the individual who will be dealing with your case. This is just not how these settlement law firms operate.

As for the statement that only a law firm can offer debt consolidation programs . Well that is not exactly accurate. What the Ftc ruling says is that a business offering credit card debt help can’t charge advance fees for their services. It also says that they must base their fees upon their performance. What this means is they have to charge based on just how much they're able to help you save.

Not only is this much better for the consumer, it also gives that firm a motivation to do the very best they can for you. The more money they are able to save you the more cash they are able to earn. That's beneficial to each party. Incorporate that with the reality that you don't pay for the services before the settlement has been achieved. This means that you are going to truly be able to save up more cash at a quicker rate and get the debts paid off faster.

I recommend you speak to a debt analyst who can review with you all your options to see which one is truly best within your scenario.

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I don’t usually reply to posts but I will in this case.

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