Call Now For A Complimentary Case Evaluation: (240) 997-5775

OR Text Us Now (240) 997-5775

Former Chapter 7 Trustee

Kindlund Legal LLC.
  • Finding The Right Debt Settlement Attorney

    Finding the Right Debt Settlement AttorneyIn this article, you can discover

    • Settlement can affect your credit score and taxes.
    • A debt settlement attorney can stop creditors from contacting you.
    • Statute of limitations and the experience of the attorney are important factors to consider.

    What Does A Good Candidate For Debt Settlement Look Like?

    When considering debt settlement, it’s important to assess whether you are a good candidate for this process. A good candidate for debt settlement typically has a debt of more than $7,000 to $8,000 claimed in a lawsuit or in collection by a creditor. If your debt is more than $7,000 you are a good candidate for debt settlement.

    How Much Do Debt Settlement Attorneys Charge?

    The fees charged by debt settlement attorneys can vary depending on the size of the debt and the location of the attorney. In Northern Virginia, for example, fees typically start at $900 to $3,000, depending on the size of the debt.

    Debt settlement charges can be either a flat fee or an hourly charge, depending on the size of the lawsuit. Consumer debts are typically charged a flat fee, which can be paid in installments monthly.

    What Is A Debt Settlement Attorney? Do You Need One?

    A debt settlement attorney is an attorney who specializes in debt settlement and can help you respond to a debt settlement suit, file an answer to a lawsuit, and defend the debt settlement suit, if necessary.

    Additionally, a debt settlement attorney can help you respond to requests for discovery, delay the process of the lawsuit or the time for entry of a judgment, and negotiate with opposing counsel to reach a settlement.

    When looking for a debt settlement attorney, it’s important to find someone who is familiar with the practices of debt settlement, including familiarity with negotiation processes, the creditors, opposing counsel.  Your attorney should be familiar with the appropriate ranges for debt settlement, submission of hardship information on your behalf and options for settling the debt.

    Is It Safe To Settle Or Consolidate Debt With Creditors?

    Debt consolidation is the action of taking out a single loan or credit card to pay off multiple debts. The benefits of debt consolidation include one payment for multiple debts and a potentially lower interest rate. You can consolidate your debt using a personal loan, a balance-transfer credit card or a home equity loan. Be cautious about taking out a personal loan for a higher interest rate or a payment that you won’t be able to afford. If you take out a home equity loan defaulting on the home equity payment will jeopardize your home. The home equity lender can eventually foreclose on your home if you fail to make the home equity payment. Contact a good debt settlement attorney before you consolidate your debt to go over your options.

    It is safe to settle or consolidate debt with creditors, but it’s important to be aware of the tax consequences. Debt settlements can incur a 1099-C form, which is issued at the end of the year for a debt settlement. The amount of the 1099-C form should be the amount of the debt settlement reduction. So if you settled $10,000 in debt for $6,000 the 1099-C would be in the amount of $4,000, the amount of the debt reduction. This amount can be income to you.

    It’s recommended that you consult with your tax advisor to understand the implications of consolidating debts with creditors. You also need to be aware of the statute of limitations so that you don’t settle or consolidate a debt with a creditor after the statute of limitations has run out.

    Can A Debt Settlement Attorney Stop Creditors From Calling You?

    A debt settlement attorney will issue a third-party authorization to your creditor or their counsel  which will prevent further phone calls from the creditor. Once the third-party authorization is issued the creditor should then only contact your debt settlement attorney.

    Are There Risks To Using A Debt Settlement Attorney?

    Using debt settlement options to reduce debt comes with several risks, including late payments on your credit report, potential charge-offs, settlement company fees, tax implications on forgiven balances, possible scams and the overall risk of settlement offers not working. It’s important to find someone who is experienced in debt settlement, including the practices of debt settlement along with statute of limitations issues.

    Will Debt Settlement Improve Your Credit Score?

    Your credit score may suffer for a bit when you first settle a debt, but your score should go up over time. If you negotiate a lump sum settlement the debt will be reported paid and settled when you complete the payment.  If you negotiate a debt settlement in a series of payments the debt should be reported as paid and settled at the conclusion of the payment plan. Eventually your credit score will improve when the payment plan is concluded.

    In conclusion, debt settlement can be an effective option for those struggling with debt. By finding a reputable debt settlement attorney, assessing your eligibility, and being aware of the tax consequences and statute of limitations, you can take steps to reduce your debt and improve your financial situation.

    For more information on Good Candidate For Debt Settlement In Maryland or Virginia, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (240) 997-5775 today.

    Jillian Kindlund

    Call Now For A Complimentary Case Evaluation
    (240) 997-5775
    Former Chapter 7 Trustee

    Text Us