Debt Collection Law Firm

When debtors cannot repay money owed, debt collection attorneys can provide solutions that will bring this harassed person to the place where he can be financially free. Many agencies offer services that claim to give methods of financial relief, but many are not capable of finding their way through the morass of laws and regulations that entangle debtors. A debt collection law firm can advise the person on how to manage the tax issues that follow any changes in his financial situation. For example, is a debtor owes $50,000 to credit card companies, and this amount is negotiated to $25,000, the IRS considers the reduction in loan amounts by $25,000 as income. It has to be reported as such. He needs a specialist who has a knowledge of all parts of the contract law, tax law, bankruptcy law, and others. This legal company can offer more solutions than a credit counseling service can.

Debt collection attorneys will assess the debtors circumstances to find out which solution will serve him best. Some of the solutions are consolidation, settlement, or bankruptcy. Each solution has it advantages and disadvantages, and since each persons financial situation is unique, time must be spent analyzing the best method to attain financial freedom. For example, a person with a lot of assets such as property may not want to claim bankruptcy because these assets may be liquidated as part of the process. On the other hand, if a person only has unsecured loans such as credit cards, a bankruptcy would not affect any assets. The debt collection law firm has the expertise to analyze these issues and present them to the client. Because the fees charged by lawyers may be higher than those charged by a credit counseling service, people who have more assets and a higher income may need the services more desperately. Someone who has few assets and limited income may be best served by settlement companies. However, the person who hires a lawyer who specializes in this type of financial process should carefully check out the reputation of the company and the success it has in negotiating with creditors.

Two of the solutions to overwhelming debts are consolidation and settlement. With consolidation, the loans are collected into one pile, usually with a much lower interest rate, and a payment schedule is written to aid the debtor in repaying the money. With a settlement, the debt collection law firm negotiates with the creditors to come up with a new amount that the debtor has to pay, sometimes as low as 50 percent of the original total. The new amount will depend on the skill of the negotiators, the internal policies of the credit card companies, and the financial distress of the person who owes the money. As soon as debt collection attorneys are hired to negotiate with the creditors, they inform the creditors, and the creditors must refrain from hassling the person who owes them money. That means that the person in financial distress will cease getting threatening mail and telephone calls. A lawyer reviews the financial situation of the debtor and then makes a plan for handling the problems. The client must agree to this plan, and then it goes to the creditors for their approval. This is a back-and-forth process that eventually concludes in a plan that is binding on the debtor and the creditors. Usually, the lawyer will act as a trustee to whom the client pays payments, ensuring that the creditors receive what is owed to them.

Repayment plans may last from a year to three years, depending on the situation. The plan is called a debt management program. When debt collection attorneys collaborate with creditors, they negotiate for lower interest rates. For example, if the person with credit cards has failed to pay on time or has gone over the limit on the card, the interest rates and fees may soar, causing the card owner to realize increased amounts of debt he cannot repay. Debt collection law firm will argue that by forgiving these fees and enabling the person to repay, the creditor will avoid losing all the funds due to a bankruptcy or accrue more expense by having to turn the account over to a collection agency. The lawyers may argue that this debtor is sincere about giving an account of himself and doing the best to follow through with a management program. In turn, the principal on the debt can be paid on immediately. If a person is paying the minimum payment on a credit card loan, it may take fifteen to twenty years to repay the amount. With the management program, even if it takes three years, that is a substantial savings.

When a person deals with the problems that have come up in his life, especially money problems, he can feel a pride in showing a responsible attitude. The debtors finances can be stabilized while working through the legal system to handle them to become financially free. In the process, more money will be freed to use for monthly expenses and budget necessities. The Bible tells us, Many are the afflictions of the righteous, but the Lord delivereth him out of them all (Psalm 34:19). Hiring debt collection attorneys can be part of the deliverance. A debt collection law firm can be the light that shows us the way to get out of the morass of debts we cannot repay.

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