Debt Reduction Methods explained
For starters let us explain what debt settlement is. Debt settlement is a process of falling past due on credit card debts to then later on work out a settlement to pay back the original debt balance owed at a much lower amount. This process can save a U.S citizen around 50% of the debt they have to pay back. In addition they can look ahead to becoming completely free of unsecured debts within two years. This process can be handled one of two ways, either hire a debt settlement company or a debt settlement law firm to enroll you into a debt settlement program. This brief article will discuss the differences between the two.
Like anything else in life credit card debt settlement has it’s positives and negatives. The pros being the enormous savings of money and time. The negative things are going into default on the debts, collection calls and the minimal chance of being sued. A credit card debt relief law firm has extra securities to offer than the normal debt settlement company.
A lot of debtors’ primary worry is that of being sued. To begin I want to let you know that it is not common practice for the collectors to sue, but it is a possibility. Over 90% of debtors who go into past due status will never end up receiving a summons to go to a courtroom. But you want to make sure that if it does happen to you that you are not left out to dry. With a debt settlement company if one of their clients gets sued there is not a thing at all they can do for them. It is UPL (unlicensed practice of law) for these companies to either advise or contact the collector attempting to sue their client. Now if that same debtor was the client of a debt reduction law firm assisting them to settle their debts the law changes. A law firm by law can still contact and work out a settlement to keep the client out of court. This is a much more acceptable method for the creditor to get money as opposed to actually having to go to court.
The next issue of debate involving settlement companies and law firms is how the collection activity is handled. Part of the debt settlement course is the consumer must fall past due in order for the collector to be offering any kind of settlement. Now these creditors do not just roll over and play dead, you will assuredly be receiving collection calls to some degree. A debt settlement company cannot do anything about the collectors calling. But a law firm can release to them an attorney retention letter to make the collectors by law to speak only with the law firm and not the client in terms of collecting the debt.
One more subject to think about is that law firms have to answer to a superior authority in order to stay in business, the Bar Association. This ensures the client more peace of mind that they will be represented properly throughout the debt settlement procedure. On the other hand a settlement company answers to no one but itself.
Steve Bis is a debt analyst and research assistant with the US Consumer Advocate, which primarily practices in credit card debt relief.
[...] Debt Reduction Methods explained Like anything else in life credit card debt settlement has it’s positives and negatives. The pros being the enormous savings of money and time. The negative things are going into default on the debts, collection calls and the minimal … [...]