Do I Need a Debt Lawyer?

A debt attorney has experience navigating through the legal system, making it more likely that you will be successful overcoming any legal obstacles you might face because of looming debt. A debt lawyer can help you determine the best route for you to work through your debt issues.

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A debt lawyer is someone with the knowledge, credentials and skill to help consumers struggling with debt sort through their financial troubles. Representing clients in cases against debt collectors is a form of consumer law, the branch dedicated to protecting consumers against unfair trade and credit practices. Debt lawyers serve as negotiators when dealing with creditors, filing for bankruptcy and lawsuits from credit card companies and other lenders.

Debt lawyers have become more prominent because household debt in the U.S. has jumped 11% over the last decade to an average of $132,529 (including mortgages) and credit card and auto loan debt are going over the $1 trillion, mark. With so much money owed, debt collection agencies are getting more and more aggressive in trying to collect. The Consumer Financial Protection Bureau says there are more than 6,000 debt collection agencies in the U.S. and their revenue for 2016 was more than $12.2 billion.

The CFPB says 70 million consumers were contacted by debt collection agencies in 2016 and about 17.5 million of them felt threatened by the call. Those people are seeking help from debt lawyers to fight back against aggressive debt collectors in court. If a debt collector is relentless in trying to recover money you owe, a debt lawyer is a good resource to help you understand your rights and provide a path to escape harassment or illegal tactics.

Can a Debt Lawyer Help My Court Case?

A debt lawyer is extremely valuable if your debt situation causes you to go to court. Debt collectors can take consumers to court to recover money owed and win most of the cases because the consumer never appear in court or send a legal representative.

Consumers who do appear in court with no legal representation are doing themselves a disservice. They often don’t know their rights in these cases and thus don’t represent themselves effectively.

With a debt lawyer, a consumer involved in a court case with a debt collector should be treated with more respect inside the courtroom and will have someone with expertise by their side. The debt lawyer can make compelling arguments to the judge in their favor.

Also, a debt lawyer can determine quickly whether any illegal methods are being used by debt collectors to recover money. This is especially useful if you have experienced harassment or threats from debt collectors. A debt lawyer will help you prepare a lawsuit against a debt collector who has broken laws that range from illegal contact to false or threatening statements.

What Can a Debt Lawyer Do for Me if I File for Bankruptcy?

A debt lawyer is almost mandatory to help you sort through a bankruptcy filing The debt lawyer should specialize in bankruptcy and debt and know what form of bankruptcy best suits your situation. They should explain the differences between filing a Chapter 7 or Chapter 13 bankruptcy and advise you what rights and obligations go with each form.

With a bankruptcy, a debt attorney will help you prepare all the required paperwork you need in your case. They can answer your questions and give you a basic rundown on rules and procedures in the courtroom.

How Much Does It Cost to Hire a Debt Lawyer?

When you are swamped with debt, hiring a lawyer can add to the pile of expenses you already have. With the right lawyer, however, your debt situation can be greatly helped and you can be put on the right financial track.

Many law firms provide free debt consultations. It is best to set up an in-person visit. When you decide on a lawyer, get a list of all charges and fees in writing so you know what to expect to pay. In a debt settlement, a lawyer may have contingency fees, which means the lawyer receives a percentage of money you recover.

A debt lawyer can charge an overall flat fee for a straightforward process like a simple bankruptcy. A debt lawyer can also charge by the hour, with the rates varying on the lawyer’s experience level and knowledge of debt.

If the lawyer charges per hour, get a written estimate of the amount of time that the lawyer will need to complete the services.

In the end, you need to weigh the potential short-term cost of the attorney with the potential long-term cost of losing in court or losing out of court to a collection agency.

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Author

Bill Fay
Staff Writer

Bill Fay is a journalism veteran with a nearly four-decade career in reporting and writing for daily newspapers, magazines and public officials. His focus at Debt.org is on frugal living, veterans' finances, retirement and tax advice. Bill can be reached at bfay@debt.org.

Sources

  1. NA, ND. How do I find a lawyer or attorney to represent me in a lawsuit by a creditor or debt collector? Retrieved from http://www.consumerfinance.gov/askcfpb/1433/how-do-i-find-lawyer-or-attorney-represent-me-lawsuit-creditor-or-debt-collector.html
  2. Noguchi, Y. (2017, January 12) Federal Agency Says Consumers Feel Threatened By Debt Collectors. Retrieved from http://www.npr.org/sections/thetwo-way/2017/01/12/509519786/federal-agency-says-consumers-feel-threatened-by-debt-collectors
  3. NA. (2017, January 12) CFPB Survey Finds Over One-In-Four Consumers Contacted By Debt Collectors Feel Threatened. Retrieved from http://www.consumerfinance.gov/about-us/newsroom/cfpb-survey-finds-over-one-four-consumers-contacted-debt-collectors-feel-threatened/
  4. "Need a Lawyer? Judge for Yourself." Retrieved from: http://www.ftc.gov/bcp/edu/pubs/consumer/products/pro14.shtm
  5. Khalfani-Cox, L. "6 Tips For Finding A Good Bankruptcy Attorney." Daily Finance. (2011, June 16). Retrieved from: http://www.dailyfinance.com/2011/06/16/6-tips-for-finding-a-good-bankruptcy-attorney/
  6. "Debtors’ Hell Part 2 –A court system compromised." The Boston Globe. (2006, July 31). Retrieved from: http://www.boston.com/news/specials/debt/part2_main/
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