Attorney Debt Negotiation


You're out of options. You have to get out from under your debts, but you're not exactly sure how. You've heard about debt negotiation, but you don't know how it works. It sounds interesting but also a little scary. You know if you don't pay your bills, your creditors might sue you and they're already threatening to take everything you own. One of the best options you have is to speak to an attorney about this unique process for eliminating your debt.


Settling Debts


Debt settlement is nothing more than paying less than you owe on your total outstanding debts. Creditors typically agree to this when they understand that they will probably never recoup all of the money you owe them. In fact, debt settlement has become quite common. While many companies offer this service, the best companies have a team of lawyers backing up the process.

Lawyers that specialize in debt collection are probably the best ally you can have. Your attorney, and his company, have likely formed relationships with thousands of creditors. The bigger the debt settlement company, the better. Because of these relationships, the debt settlement company can negotiate your debt down so that you only owe mere pennies on the dollar. This is an incredible feat, and it can save you literally thousands of dollars.


Pros


Creditors want their money. With debt settlement, they get it. No, they don't get all of it, but they do get enough that they're happy to take less than what you owe. When a creditor agrees to settlement, the payment you make is considered a full payment. That means that you no longer owe any money. You're free to move on with your life. You wont' get anymore harassing phone calls, letters in the mail, threats to sue, or wage garnishments.


Cons


The major disadvantage of debt settlement is that your credit often takes a hit - a big one. Since you're paying less than the full amount you owe, your creditor will often list your debt as "settled as agreed." Lenders see this as a sign that you don't pay your bills and may not be willing to lend you any money in the future. Unfortunately, there's not much you can do about this. The fact of the matter is that this is part of the trade-off. If your credit is already hurting because of late-payments, a settlement on your credit report isn't going to be great, but it's better than ongoing derogatory remarks.


Considerations

Debt settlement isn't your only option. Many people choose to escalate to bankruptcy, but this isn't necessary either. You always have the option of calling up your creditors and working out a payment arrangement that takes you out of late-pay status, and stops the collection calls. This type of negotiation doesn't involve a lawyer, and it won't have the same negative consequences of debt settlement. The downside is that it doesn't always work.

Where a lawyer can, more or less, strong-arm a creditor, you are often at the mercy of your bill collectors. You have to hope that you can convince them that you really are experiencing a financial hardship (you should be if you're considering settlement).

One final option is to borrow money from your 401(k) or, better yet, your IRA or Roth IRA (ideally) to pay off your debts. A Roth IRA allows penalty-free withdrawals for any reason as long as you're withdrawing your principal amount. Just be sure to repay the money as this is your retirement savings. You could also borrow from a life insurance policy if you have one that builds cash value. Any way that you have open to you to bring your accounts current should be considered.