Recently I have been listening to businesses that are informing people who are looking for debt consolidation programs, that you now have a law firm to manage your situation. They claim that it is now illegal for businesses that are not law firms to do debt settlement.

This isn’t exactly correct. The issue is that with businesses, such as these law firms, that ask for upfront fees for their services. Nearly all law firms will charge their clients up to a thousand dollars for a retainer. In addition they generally also charge up to eighty dollars a month for their legal services.

Let’s have a look at this. You’re retaining the services of a law firm. That seems wonderful! Ok now what exactly are you retaining them to perform? Well if you examine their legal agreements you are retaining them for the purposes of negotiating your credit card debt. Last time I looked there was no legal documents required for that, no courtroom appearances. In fact there is no requirement for a law firm or even a paralegal what so ever to just negotiate your debt.

Second as mentioned, you are also paying a monthly legal fee. What’s that for? Well they are going to tell you they are contacting your creditors informing them that they’re representing you. Well what they are doing is merely mailing them a power of attorney letter. This incidentally most collection companies file inside the huge round file cabinet. Sending this notice won’t end collection phone calls. Additionally, they do not tell you this, but they don’t send this letter to all of your creditors. The reason behind this is that several creditors will immediately send your file to their legal division for a prospective law suit if they obtain any such letter.

The only approach to get the telephone calls to fully stop would be to send them a cease and desist notice informing them that you do not plan to pay them back the debt and that they are to stop all communications. You can envision what this type of letter will do. Should you cut off all potential avenues the creditor has to collect the cash directly from you, it’ll more than likely trigger them to use the court system to get back some of their debts. Furthermore, most of these settlement lawyers aren’t even doing the work for you. You will find several pending law suits against these law firms proclaiming that every aspect of the settlement work is being done by non lawyer for profit companies. Meaning you’re spending money on services of an attorney but an attorney isn’t even supplying you those services.

Now let’s take a look at the way they charge their negotiation charges. Most law firms will charge a flat fee of fifteen to twenty percent of one’s total debt amount. This payment is spread out within the first year or two monthly payments you make. Meaning you are paying them for services that they have not even performed. Additionally if you are paying them a set amount, where’s their incentive to negotiate for the lowest total amount?

Now according to the Federal Trade Commission’s ruling established October 27th an attorney cannot charge any upfront charges unless the client has a face to face meeting with the lawyer that would be handling the case. This does not imply that you enter an office building, shake hands with an attorney, then have a legal assistant hand you papers to sign. This meant that the actual attorney that you spoke with, would review the details of the program together with you at that period. And that lawyer will be the person who will be dealing with your case. This is simply not how these settlement attorneys operate.

As for the statement that only an attorney can offer debt consolidation programs . Well that’s not really accurate. The Ftc ruling says is that a organization offering debt relief programs can’t ask for advance fees for their services. It also says that they need to base their fees upon their overall performance. What this means is they need to charge according to how much they are able to help you save.

Not only is this better for the client, it also gives that business an incentive to do the very best they are able to for you. The more cash they are able to help you save the more cash they can earn. That’s beneficial to each party. Combine that with the truth that you do not pay for the services prior to the settlement has been accomplished. This means that you will actually be able to save up a lot more money at a quicker rate and get the debts paid off quicker.

I would suggest you speak to a debt analyst who is able to review with you your entire alternatives to determine which one is truly best within your scenario.

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