It’s not always easy to ask for help when you’re dealing with debt — but it’s often the best step toward coming up with a plan to get your finances back on track. Millions of Americans have dealt with overwhelming debt using a variety of strategies over the years, two of which include working with a debt lawyer and working with a consolidation/settlement company.
Here’s more on some of the similarities and differences between debt attorneys vs. debt consolidation programs.
What Debt Attorneys Can Do
When you are thousands of dollars in debt with no feasible way to pay it off month over month, your mind may jump right to bankruptcy as the only option. However, due to the fact, a Chapter 7 bankruptcy filing stays on your credit report for up to 10 years and Chapter 13 can stay on your credit report for up to seven years, it’s worth examining all options before jumping into this drastic approach.
A debt attorney is a qualified professional who can help you explore your options — including debt settlement and bankruptcy — for a designated fee, of course. As the Ascent notes, here are a few cases in which it may make sense to think about hiring a lawyer:
- You are facing wage garnishment due to unpaid debts.
- A creditor is suing you for the money you owe them.
- You are leaning toward filing for bankruptcy, but want to be sure it’s the best route before proceeding.
If you’re worried about how much it will cost to work with a debt attorney, see if any reputable law offices in your area offer free consultations. This can at least help you decide whether it may be a worthwhile strategy to pursue.
What Debt Consolidation/Debt Settlement Can Do
Another potential strategy is consolidating and/or settling debts through a debt relief program.
Debt settlement entails trying to get creditors to agree to accept a lesser sum on outstanding balances through negotiations. Borrowers can try to settle on their own, or they can enroll in a relief program through which they’ll have to stay accountable for saving up the funds. The debt professionals will handle the actual communications with creditors.
When a consolidation component is added to debt relief, it entails taking out a loan to cover debts immediately — oftentimes in conjunction with settlement. So, while the ultimate goal is still to get creditors to accept a percentage of the original balance in exchange for timely payment, the funds would originate from loans that the borrower would then have to pay back on a fixed schedule to the consolidation company.
All debt relief services are not the same.
Some hallmarks of debt settlement and debt consolidation companies to go with include:
- Firms should not ask for any fees until after they have provided a service. Companies seeking to collect money up front are in violation of Federal Trade Commission regulations.
- A consultant will be happy to discuss your financial needs and help you figure out whether you’re a possible candidate for settlement and/or consolidation. They should talk with you without requiring you to sign up or commit.
- You should be able to find plenty of consumer and third-party reviews online speaking to the legitimacy of the program and its ability to get results. Lack of an online footprint is a bright red flag.
Working with a debt attorney and working with a settlement/consolidation company represent just two approaches to addressing serious debt. Finding the right fit for you will require some research and weighing the pros of each against the cons.