Posted On May 23, 2022
How Much Does a Debt Lawyer Cost?

How Much Does a Debt Lawyer Cost?

How much does a debt lawyer cost? If you are struggling with debt and considering hiring a debt settlement lawyer, it makes sense to determine how much you can expect to pay. However, you should keep in mind that paying a debt settlement lawyer will help lower your overall debt load.

Over 75% of Americans owe some type of debt or have a past due bill. Home mortgages make up the majority of that debt.  Taking mortgages out of consideration,  around twenty percent of Americans still have some other form of debt. This only becomes an issue when the person is unable to pay what is owed promptly.

Many people who find themselves unable to repay debt become overwhelmed when trying to find a solution. If this is the case, talking to a debt lawyer may help you navigate the process, and may even result in a reduction of your debt. Hiring an attorney can be a daunting process if you have not had to do so in the past. However, depending on what type of debt you owe, it can be in your best interest to seek legal help. Understanding what debt lawyers do and how they can help you select an attorney that meets your needs.  

What Does a Debt Lawyer Do?

A debt settlement lawyer can help you negotiate with creditors or any third-party companies that they have hired to collect your debts.  They can also speak to any attorneys that collection companies might have on staff. The debt lawyer can try to lower the amount of the interest rate of the debt, as well as lower payment requirements, which could also lead to a settlement.

A settlement is when the creditor agrees to a set lowered amount that they will take as payment in full. Some creditors might put restrictions on either the amount that you must pay or how quickly it must be paid to the creditor. These are all terms that a debt settlement lawyer can negotiate with the creditor.

If a settlement is not available, a debt lawyer can help you figure out what your best options may be to pay back what you owe. This might include filing for bankruptcy to avoid any potential wage garnishments that creditors might have issued. It is important to understand if filing for bankruptcy is the right route for you. A debt lawyer can tell you which of your debts will be discharged in a bankruptcy.

Filing for bankruptcy can help with most consumer debts. However, it may not get rid of tax debt, depending on what type of taxes you owe. Child support must be maintained during a bankruptcy proceeding and will not be discharged at the end of the bankruptcy process.  All of these questions should be covered in the very first consultation with a debt settlement lawyer. In your initial consultation, you and the attorney should go over all the debts you may owe and how you plan to handle them. Once the attorney has evaluated not only how much you owe, but also what types of debts are owed, then he or she can provide an idea of how much the entire process might cost.

It is important to keep in mind that the lawyer should not ask for a large amount up front, or make promises about receiving money in court. A fair attorney will not ask for money before providing services. This is why it is important to ask clear questions during the initial consultation, not only about hourly rates but when payments are expected if the process does become a lengthy one. 

How Much Will a Debt Lawyer Charge to Negotiate with My Creditors?

Most attorneys charge by the hour at differing rates, depending on what types of services they offer to their clients. Their rates will also be dependent on how much expertise the attorney has in the field and their success rates on cases. It is very common to see rates between $200-$400 an hour. An attorney’s hourly rates do not include any extra expenses that may occur during your debt settlement process, which can add up to over thousands of dollars.

Some attorneys might charge flat rates for specific services, or may only charge for providing instructions that you can use to deal with their creditors themselves if you want. The only downside to this option is that you will then have to do all the work of calling and talking to your creditors by yourself. If you feel confident you can understand these instructions and answer any relevant questions the creditor might have, this might not be a bad option.

A final option that debtors may look into is working with a debt settlement company. However, debt settlement companies do not provide the same services as a debt settlement attorney and do not provide the same level of individualized attention.

Knowing what a debt settlement lawyer can do to help reduce your debt can help you decide if it is a process you can handle themselves or if it falls outside your comfort zone. If the debt is child support, some type of tax that is owed, or a large medical debt that might seem insurmountable, then an attorney can help. Allowing an attorney to negotiate in these types of situations could allow you to have a more positive outcome than if you handle it yourself.  

What Are Some Consequences of Leaving Debt Unpaid For Too Long?

The type of debt you owe can determine what will happen if you do not pay it back in the time frame the creditor has outlined. Utility services can be suspended for non-payment after being past due for too long. You may not be able to have your services turned back on unless the amount owed is paid in full. Unpaid child support may lead to having to go back into court to explain why you have not been paying support. The hearing may result in money being taken directly from your paycheck. If you owe unpaid child support, the court can also order the seizure of your tax return to help pay back child support.

Many consumer debts can be sent to collections. Consumer debts that might be sent to collection agencies include: 

  • Unpaid medical bills for hospitals, dentists, and doctors.
  • Ambulance rides for both private and city companies.
  • Checks that bounced due to insufficient funds or closed accounts.
  • Overdrawn bank accounts or defaulted bank loans.
  • Utility services have been shut off and have remained unpaid.

Once bills are sent to collection agencies, these agencies only care about getting the consumer to pay back the debt as soon as possible. If these collection agencies are unable to get the debtor to agree to pay, they may hire an attorney’s office to bring the debtor to court to prove that he or she owes the bill. If the court determines that the defendant owes money, the court can enter a judgment allowing wage garnishment. Wage garnishment is when a percentage of a debtor’s paycheck is automatically sent to his or her creditors each month to satisfy a debt.

When the court enters a judgment against a debtor, it might affect his or her credit score and make getting any future financial help more difficult. The court or collection agency may also add additional fees to the total amount owed by the debtor. Further, the longer it takes the debtor to pay, the more interest accumulates. 

Knowing what can happen if your debt remains unpaid for too long can help you decide to hire a debt lawyer. This knowledge can make the first consultation and hiring process easier, so you can begin paying off your debt faster.