And the Lawyers Shall Set You Free: Debt Settlement

September 15, 2013

After years of charging purchases to credit cards and racking up thousands of dollars in debt, some of us find we simply can’t pay all of our obligations.

In fact, we may be facing the very real problem of having accounts charged off, being handled by collection companies, or living precariously on the edge of falling into those circumstances.

The answer is not to deny the problem or run away from mounting debt.
Instead, today’s consumers have a very real opportunity to settle and close their financial obligations by using the services of an attorney to pursue sound debt settlement agreements. Debt settlement is focused entirely on repayment, though it often seeks to secure consumers a lower overall balance to be repaid and a more friendly payment schedule that works with their financial needs.

How is Debt Settlement Even Possible?

For consumers on a tight budget, many of whom are facing credit and debt problems, the promise of debt settlement sounds almost too good to be true. The simple truth of the matter, however, is that creditors are primarily interested in one thing: Repayment of financial obligations. Debt settlement offers creditors a way to make sure they’re getting paid the most possible, and that a payment plan is in effect, helping them minimize their losses. Without an offer of settlement and a proper schedule of repayment, most creditors know that they could potentially lose out on a significant amount of money. Whether by bankruptcy or a simple inability to pay, creditors place themselves at risk by refusing to offer agreeable settlement terms.

Of course, one thing to keep in mind is that creditors typically won’t offer friendly settlement terms, or any settlement terms, to individual consumers who ask for the courtesy. The process is almost always more successful when utilizing the services of a skilled attorney who has existing relationships with major creditors, a thorough understanding of the industry, and the ability to understand the consumer’s financial situation and their ability to make reasonable, timely payments on each debt.

Using a lawyer’s services to seek better balances and friendlier repayment terms is entirely legal, and many creditors have entire departments that handle the settlement process. Creditors today almost always have a series of options, and even formulas that can work with people based on their unique financial needs. All the consumer needs is a strong, informed advocate who has his or her best interests in mind.

Pulling it Off: How Consumers and Their Lawyers Can Seek Settlement Together

Debt settlement is a unique process that allows debts to typically be settled for a small percentage of their total balance. This process requires that consumers share a great deal of honest information with their attorneys, however, since this information will be key to pulling off an effective settlement that helps monthly payments and overall budgets, rather than harms them.

To that end, attorneys need access to financial information that might include pay stubs, tax information, and records about past payments, any balances that were paid late, and any prior communication with the creditor .This information essentially gives the attorney a head start and lets them understand the type of situation that they’ll be dealing with when contacting each creditor.

By arming the attorney with financial data, they’re more easily able to work out a repayment solution that will work well over the long-term. Be sure not to overstate or understate monthly income or expenses, and make sure the attorney knows about any late payments, charged off accounts, or other information that might be essential when first contacting the creditor and discussing opportunities.

Finally, remember that debt settlement typically does not cover outstanding auto loans or home mortgages. That’s because these two types of debt are collateralized by the home or vehicle that the consumer has financed. For any solutions regarding the repayment of collateralized debts, consumers will typically have to work with their lenders one-on-one, making payment arrangements on a month-to-month basis rather than settling the account.

With Information and Determination, Settlement is a Viable Option

Debt settlement succeeds where virtually every other financial management tactic fails. It offers consumers the opportunity to be represented by a strong legal advocate, arranging for smaller total balances on most debts and better monthly payment obligations to each creditor. With accurate information regarding income, expenses, debts, and past payment behaviors, consumers will give their attorneys the tools they need to provide an agreeable, ethical way out of overwhelming debt.


By Judah of the law firm of Peters and Associates in Las Vegas, Nevada.