The Pros and Cons of Hiring a Debt Settlement Attorney

Finding yourself in way over your head with unsecured debt and in need of a debt settlement attorney is a real shock to most of us. We all hope that this is one situation we will never find ourselves in. Unfortunately, with the economy slower to recover than we had hoped and a high unemployment rate many people find themselves struggling with unpaid bills and too much debt to hope to repay without professional help.

There are a few pros and cons when considering using a professional debt settlement lawyer to help you negotiate your collection accounts.

1. You get quick relief from harassing phone calls from creditors. Once you retain a professional to represent you, they will deal directly with your creditors on your behalf. In most cases, the letters, phone calls and other harassment techniques debt collection agencies use to get you to pay will stop in relatively short order.

2. Your credit will only take a temporary hit. Unlike filing bankruptcy, which is a matter of public record forever and stays on your credit report for 10 years, paying off your debt via debt negotiation and settlement will only have a temporary negative effect on your credit. Once your account is paid under the terms negotiated, you credit score will once again improve.

3. You will ultimately end up paying less than if you negotiate your unpaid accounts yourself. On average, if your creditors will negotiate with you at all, the best deal you can hope to negotiate on your own is usually around 75% of the amount owed. With the help of a professional who is experienced and knowledgeable, you may actually end up paying only 40 % of the amount owed. I your balance is high, this can be a substantial savings.

4. You will retire your debt more quickly than without negotiating your debt. Paying only the minimum balance on your accounts or minimum with late fees will keep you in an endless cycle of being cash poor. Paying the minimum has one other very undesirable effect on your finances; you will need to pay monthly payments for 28 years to retire your debt. Running high balances on your revolving charge accounts is a lot of unnecessary stress and interest to have to endure because of not acting to get the situation resolved sooner rather than later.

1. There is a cost associated with hiring professionals to retire your debt for you. In most cases attorneys who specialize in settling debt charge a retainer to get started, enrollment fee, and a percentage of the savings they negotiate for you. This amount is negotiable and does vary from firm to firm. Some offer payment plans, while others do not. It is best to ask about the payment arrangements ahead of time, especially when you are cash strapped.

2. Debt settlement attorneys can not negotiate secured debt, back taxes, student loans or government loans. They work specifically with unsecured debt like medical bills, credit card debt and unpaid personal loans.

3. If you owe a reasonable amount to repay, under $5000 or less, you may spend more to hire representation than you can reasonably hope to save. In this case you may want to look into other alternatives to settle your unpaid account.

The pros and cons of hiring a debt settlement attorney make the decision a significant one. Good candidates for the services of attorneys specialize in debt settlement are those with over $5000 of unsecured debt, who are serious about getting out of debt within 2-5 years, and willing to take a temporary hit on their credit rating rather than the more permanent credit problems bankruptcy would ultimately incur.