Their ads are everywhere, you’ve probably heard them on the radio, TV, streaming music on the Internet – everywhere. Debt settlement companies popped up in droves during the recession and many still remain today. Arizona was hit especially hard by the recession so it became a target market of Debt settlement companies.
Debt settlement companies may promise you all sorts of things. They make debt elimination sound like a right they can bestow upon you if you just call the 800 number…now! The truth is, most of these companies can’t and won’t do that. The reason is pretty simple – they aren’t lawyers and won’t be able to protect your legal rights.
Reason #1: Exorbitant Fees with Arizona Debt Settlement Companies
Debt settlement companies will often make you pay extremely high fees that are broken into bite sized monthly payments over a very long period of time, sometimes 4 years or more. When you add it all up, these fees are usually far more than what you would have paid an attorney to resolve the matter.
We’ve seen debt settlement companies charge tens of thousands of dollars and still not resolve all the debt. If you find yourself on the wrong end of this deal, chances are, you’ll have little recourse. Companies like this tend to go out of business or disappear. Getting your money back usually proves to be nearly impossible.
Many people get lulled into it because of the seemingly “low” monthly payment the debt settlement companies offer. If you’re being asked to start making a monthly payment to a debt settlement company and you haven’t even met with a local licensed attorney about your situation, it’s best to walk away and avoid the debt settlement company.
Reason #2: No Legal Representation When You Get Sued
This is a very important reason. When you have debt, especially multiple accounts, the likelihood you could get sued goes up. And it goes up further the longer you stretch out the resolution process. So if you have several credit card debts or other consumer debts, and you’re considering signing up with a debt settlement company, you should think twice. Who will represent you when you get sued?
Chances are, the debt settlement company won’t have anyone lined up to represent you. They may make vague references to them having “attorneys” on board, but do you really know what that means? Whose attorneys are they? Do they represent the debt settlement company, is this just some attorney that the debt settlement company calls sometimes when it has questions? Where is this attorney? Why aren’t they in the meeting with you? Are they even an Arizona licensed attorney? These are the kind of questions you should be asking.
Unfortunately, we’ve seen numerous occasions where the client has enrolled in a debt settlement company’s program, then gets sued by a creditor and the company is of no help. The company sort of panics and disappears, or tells the client to handle it themselves, or tells them that legal fees are not covered by their program, etc. Even if the debt settlement company does the right thing and refers you to an Arizona attorney (at your cost of course), you are basically starting over and the debt settlement company was an unnecessary middleman.
Reason #3: Debt Settlement Companies Have No Leverage
One of the basic principles of debt negotiation is that you need to have some leverage. You need a “hammer” in the negotiation process, something that gives you bargaining power. Otherwise, what incentive is there for the creditor to lower or eliminate your alleged debt?
A good consumer debt attorney will be able to find leverage for you in the negotiation process. For example, there are numerous possible defenses to a debt case. Knowing those defenses and how to use them can give you tremendous leverage in negotiating a settlement. Some defenses are so powerful, such as the statute of limitations, that simply raising the defense may make the entire debt go away. Other defenses may at least give you leverage for a better deal.
Also, a consumer debt attorney who practices bankruptcy law will be able to use this knowledge to evaluate all of your options and develop a comprehensive game plan for you. Sometimes, just being able to pre-qualify you for a bankruptcy can provide you the leverage to negotiate a better settlement even if you don’t actually end up filing bankruptcy. All of these tools in the toolbox are available to you when you hire an experienced Arizona debt attorney.
With debt settlement companies, it’s often a different story. You may be assigned a “debt negotiator” that will communicate with your creditors. But this person is usually not an attorney and may have little or no training in debt negotiation. And even if they have some experience in debt negotiation, they have no real leverage to do so. They will basically just be asking the creditor to voluntarily reduce your debt amount.
There’s really no compelling reason to go with a debt settlement company over an Arizona consumer debt attorney. At the very least, it’s a good idea to have your situation evaluated by an attorney before making a decision.