What is a Debt Negotiation Attorney?

Mary McMahon
Mary McMahon

A debt negotiation attorney is a lawyer who specializes in settling debts, assisting clients with the process of resolving outstanding debt. People in debt who cannot cover their debts may consider debt negotiation before attempting to file for bankruptcy. Working with someone who has experience in this area can increase the chances of a successful outcome, as the debt negotiation attorney is familiar with the practices and policies at many financial institutions and can negotiate a reasonable settlement for the client.

A debt negotiator attorney may work with creditors to help clients negotiate bankruptcies.
A debt negotiator attorney may work with creditors to help clients negotiate bankruptcies.

When a client approaches a debt negotiation attorney, the first step in the process is providing the attorney with as much information as possible about the debts. The debtor should have a list of creditors and the amount owed, along with information about whether they are in good standing on their accounts. Client and attorney can discuss how much money is available for debt settlement, and the attorney will start contacting creditors to see if they are willing to accept a partial payment to close the account and forgive the debt.

The amount people can save by using a debt negotiation attorney varies. Some creditors may refuse partial payments or may demand a high percentage of the payment, while others may be more flexible and willing to negotiate. The partial payments will reflect on the credit record, but they are not as damaging as a bankruptcy. Settling debt can provide an opportunity for salvaging a credit record and getting a debtor off on the right foot for rebuilding credit.

Debtors can approach their creditors to negotiate directly, but using legal representation can have some advantages. Attorneys usually spend less time on the phone waiting to reach someone who can authorize a partial payment to settle the debt, and they are more familiar with the process of bargaining down debt. In addition, the presence of legal representation can suggest that a debtor is preparing to file bankruptcy, and creditors may be eager to settle and get some cash, rather than forfeiting everything in bankruptcy proceedings.

The debt negotiation attorney will charge fees. The fee schedule depends on the practice, but generally, people have to pay a percentage of the amount owed as an up-front fee, and will also need to pay maintenance fees to keep the attorney working. After the attorney settles all of the client's debts, a final fee may be based on the amount of money saved. People should review fee schedules and contracts carefully before choosing an attorney.

Mary McMahon
Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a wiseGEEK researcher and writer. Mary has a liberal arts degree from Goddard College and spends her free time reading, cooking, and exploring the great outdoors.

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