Things to Ask to a Debt Settlement Attorney During a Consultation
Personally, the first thing I ask any attorney is how much his fee is, therefore that’s the first thing one should ask a debt settlement attorney as well. It is also important to ask whether his fee for a debt settlement program is a flat fee or a fee that is based upon either the total dollar amount of outstanding debt or the total number of accounts that the debt settlement attorney will be representing and negotiating for you.
The second question to ask your debt settlement attorney is how long he has been doing debt settlement programs and the success rate. Hopefully by now you already have referrals for this particular debt settlement attorney and feel confident that he is the real deal and will do your debt settlement program justice. If not, ask him for some.
Third, ask him if he can quote to you the average percentage of the initial debt he usually settles at. In my experience, most creditors will agree to settle for something in the area of 40% to 60% on average, depending upon the type and age of the debt. Bear in mind that some of your debt, if represented by a collection agency, may have already been sold by the original creditor for pennies on the dollar, therefore in some cases, your debt settlement attorney may be able to negotiate an even lower settlement on your behalf.
Fourth, ask him if he can negotiate with the creditors for a positive spin to be put on the settled accounts with the credit bureaus. Generally, they report it as “settled for less than owed”. Ask him to negotiate for the creditor to report it as “paid as agreed” if possible. Sometimes this is a tough sell, but worth a try, so it won’t hurt to ask him. If it isn’t possible, or if it might cause the creditor to up the ante on the actual debt settlement amount, don’t worry about it as it can be fixed later with credit repair.
Fifth, ask your debt settlement attorney if you can pay the debts off in payments. Generally, he is in a much better position to negotiate with your creditors if he can offer them immediate payment in full, so you might want to plan ahead and get a loan or make some other arrangements to pay the debts in full asap so that you can garner the best low percentages from the creditors in your debt settlement program.
Sixth, ask your debt settlement attorney approximately how long he estimates the debt settlement process will take.
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Well I can speak from experience. Lost business due to economy, trying to find another job to no avail, can't collect unemployment, husband gets a small disability so we can't get food stamps, vehicles repoed, house in foreclosure, filed bankruptcy which becomes final in July. We do not have relatives in the area, but our parents have sent money to help pay for utilities. Go to the local food bank for food. Husband suffers from severe depression- he can't function and is suicidal, can hardly afford his medication. When all is said and done I have no idea what will happen to us. We will lose everything. We may have to split up and each go live with each others parents. This is happening to people all over the country and it will continue to get worse. One thing that I do not do is feel sorry for myself nor do i ask anyone else to, that would make things worse. I do give thanks to God for the blessings that I do have. I don't like the idea of being homeless shortly but it is now out of my hands. Thank you for your concern.
STAY AWAY from "debt consolidation" company that promises to cut your debt in half through debt settlement….This is a risky tactic of deliberately ceasing all payments to creditors and forcing your accounts into default to attempt settlements. You pay a monthly fee to a debt consolidator….this entire fee goes towards building a settlement account and to the consolidator's fees to “settle” your accounts in the future. Your credit card companies will deliberately not be paid so that all the accounts will default/charge-off so that they can attempt settlements at around 50%. If you are current on your accounts, this process will ruin your credit rating for sure. Debt settlement is like a roll off the dice with your finances…You can never predict how your creditors will respond to the deliberate defaulting of your accounts…they might settle at 50%…or they might serve you a summons, take you to court…and if they win, you could be looking at wage garnishment.
None of these “debt consolidation” firms have the power to force your creditors to accept settlements. Your creditors have the right to refuse these terms and take you to court.
A better option is entering a Debt Management Plan (DMP) with a non-profit credit counselor like CCCS (Consumer Credit Counseling Services). Contact your local Red Cross for a referral. They can negotiate lower payments and interest rates. They do not negotiate settlements.
They will require you to stop using all credit and to cut up your cards. Your credit report will be updated to "enrolled in debt management." This does not damage your credit, but it may make it impossible to obtain new credit while you are enrolled in their program….so don't use this service if you anticipate applying for a new apartment, car loan or mortgage anytime soon, as you would probably be denied while you're enrolled in the CCCS debt management program…. Otherwise, it can be a very good way to deal with your debt.
Since most of these settlement companies collect monthly payments from you and sit on them until all your debts are 90 days past due, then offer lowball settlement under threat of you filing bankruptcy, I suspect they end up with a lot more than 15% of the total. This process also trashes your credit and some credit card companies refuse to play and will just sue.
That said, 15% seems to be a reasonable fee for actual settlement. Before you sign on the the dotted line, get lots more details. It wouldn't be such a good deal if the settlement was 85% or more.
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