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For a person dealing with unmanageable debt, a debt settlement service may seem like a good idea. But as any bankruptcy lawyer will attest, these services are rarely looking out for a debtor's best interests, and they often do more harm to a person's finances than good. Debt settlement companies essentially persuade creditors to accept a lower amount than the debt you owe — but they find ways to recoup that money and then some. Below are three reasons to avoid debt settlement companies and instead consider the services of a bankruptcy lawyer.

3 Reasons to Steer Clear of Debt Settlement Companies

1. Debt Actually Increases

In most situations, debt settlement services advise their clients to stop paying creditors. Their reasons for this advice seem simple enough: a debt can't be settled until payments have stopped. But there is a period between the date you stop making payments and the date the settlement process begins, often a few months or more. In that time, you've defaulted on payments and accrued further fees, penalties, and interest charges. So, you end up with more debt than you had to begin with.

2. Creditors Can Refuse to Settle

bankruptcy lawyer It's not written anywhere that a creditor has to comply with a debt settlement service's request. Legally, they are entitled to every cent they are owed, so they are completely within their rights to refuse to settle for a lesser amount. In fact, they might even ramp up efforts to collect on the money you owe, including filing a lawsuit against you; if this happens, always consult a bankruptcy lawyer right away.

3. They Can Charge High Fees

If you hire a profitmaking debt settlement service, they often charge exorbitant fees to settle your debt. There will be a setup fee right out of the gate, in addition to a monthly fee. Then, you'll have to pay them a percentage of every debt they settle. This adds up quickly, and for a person already trying to juggle the burden of skyrocketing debt, it is an additional stress they do not need.

 

If you're considering a debt settlement company, first contact an attorney and explore the possibility of filing bankruptcy, which can be a much faster and more efficient way of reducing or eliminating debt. The bankruptcy lawyers at the law office of Padgett & Robertson, Attorneys at Law in Mobile are here to help. For four decades, they have been working with the people of Southern Alabama to find lasting debt relief solutions. Call (251) 342-0264 or visit them online to schedule a free consultation today.

 

No representation is made that the quality of legal services to be performed is greater than the quality of legal services performed by other lawyers.

We are a debt relief agency. We help people file for Bankruptcy relief under the Bankruptcy Code.

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