Is Hiring an Attorney for Debt Consolidation in My Best Interest?

Struggling with debt is stressful and overwhelming. Debt consolidation is a way to stop phone calls from creditors and begin rebuilding your credit. You have different options for debt collection relief. You can negotiate debt relief on your own, use a debt settlement company, or hire a debt settlement attorney.

Understand the differences between a debt consolidation company and a debt settlement lawyer. For legal advice about your debt relief options, contact a consumer rights lawyer.

What Is Debt Consolidation?

Debt consolidation is when you combine multiple sources of debt into a new loan with a regular monthly payment plan. This often allows you to get a lower interest rate so you can pay off your total debt faster and for less money.

You may owe money to many different lenders and creditors. After debt management, settlement, and consolidation, you’ll only have to make one payment per month to pay off your total amount of debt. Common types of debt include:

• Credit card debt
• Medical bills
• Student loans
• Car loans
• Mortgage payments

How Do I Create a Debt Consolidation Plan?

A successful debt consolidation plan requires a lot of work on your part. To start, gather the following information:

• Draw up a household budget and determine your monthly income and expenses
• Include expenses from the last several months to make sure your budget is on target
• Prioritize your debts by interest rate and other fees
• Keep a record of conversations with your creditors or collection agencies
• Get any agreements made with creditors in writing

A lawyer with experience in debt consolidation can help you put together a repayment plan. The Federal Trade Commission (FTC) also has information about debt relief and consumer protection laws.

Can I Handle Debt Consolidation on My Own?

You can try to negotiate with creditors on your own. Be prepared before contacting them and brush up on your negotiation skills. Get a free copy of your annual credit report to see all your creditors, accounts, and outstanding loans.

You can try to negotiate with debt collection agencies. There are debt collection laws that protect consumers from deceptive collection practices. Ask the agency to provide information about the original creditor’s name and contact information. You can contact the creditor to confirm the source and the amount of debt.

The creditor may accept a lump sum repayment to settle the debt. Come up with an amount you can afford based on your financial situation. Creditors and collectors may take a smaller amount instead of continuing collection actions. Get any settlement offer in writing to make sure it’s final.

You may also consider a repayment plan. You can try to lower the repayment amount and negotiate a more affordable payment plan.

What Is the Difference Between a Debt Consolidation Company and a Lawyer?

There are many differences between a debt relief attorney and a debt consolidation company. Debt settlement companies negotiate with creditors to lower your debt. However, they don’t owe you any legal duty, and they can’t give you legal advice. A lawyer has a fiduciary duty to act in the best interests of their clients.

A lawyer may be able to identify expired debts that are beyond the statute of limitations. Your lawyer can also provide legal representation in a debt collection lawsuit. They can stop creditors from seizing your bank accounts and garnishing your income. They can also help stop foreclosure.

Sometimes, debt consolidation may not be the best strategy. Chapter 7 or Chapter 13 bankruptcy might be a better option. A bankruptcy lawyer can explain your options and take legal action. For legal advice about your debt relief options, talk to a debt settlement lawyer.

How Much Do Debt Consolidation Companies Charge?

Debt consolidation companies generally charge a fee based on a percentage of the debt. Be clear whether the fee is a percentage of the settled debt or the debt before consolidation. For example, the debt settlement company charges a 25% fee based on the settled debt. You owe $20,000, and the company negotiates with creditors and lowers the debt to $10,000. The debt consolidation company charges a $2,500 fee.

What Are Debt Consolidation Scams?

Beware of debt relief and credit score repair scams. Scammers claim they will clear your unsecured debt for an upfront fee. However, they may just take the money and do nothing to help lower your debt. They could also offer debt consolidation and continue to make monthly payments, which never go to the creditors. You can report fraud to the Federal Trade Commission.

Can a Lawyer Help Me Deal With Debt Collectors?

Creditors and collection agencies don’t have your best interests at heart. Don’t expect debt collectors to give you good advice. They want to get as much money from you as possible. They can be aggressive, and some may even lie. Instead of dealing with the creditors, turn to a lawyer for help.

Your lawyer can help you determine which debts are valid and how much you owe. They can negotiate with creditors to lower your debt. They can also deal with debt collectors, so you don’t have to. If a creditor is taking legal action against you, your lawyer can represent you in court.

Having your lawyer deal directly with your creditors is a huge relief. They can help you get a better deal from your creditors and save you the stress of dealing with calls from collection agencies. They can also help protect you from unethical debt collectors. Contact a consumer rights lawyer for more information about your legal rights.