I Am Considering a Debt Settlement Program But I’m Afraid of Getting Sued…What Should I Do?

The following guest post was contributed by Veritas Legal Plan.

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If you are reading this article chances are you are considering enrolling or are currently enrolled in a debt relief program. Some of you will choose the nonprofit CCC/Debt Management Programs and those that are unable to afford the payments offered by the nonprofits will have to choose between a performance based debt settlement company and an attorney model debt settlement firm…. So which is better?

The attorney model exemption allows the firm to charge an upfront “retainer fee”. This gives the attorney model the advantage of instant revenue to then pay a network of affiliate sales companies to aggressively market their services. On the other hand, because the performance based companies cannot charge any upfront fees, marketing costs can take as much as 7 months to recoup. Clearly the attorney model has the marketing advantage with much more exposure to the consumers than performance based companies as a result.

If you are considering either the Attorney Model or Performance Based Debt Settlement, you need to know that lawsuits happen. Creditor lawsuits are at an all time high as the debt buying business explodes. The debt buying/collection industry as a whole made $11.7 billion in revenue last year. Most debt buyers pay about 2.5 cents for every dollar of bad debt it purchases but it makes back about 9.5 cents and filing lawsuits is the favored method of collection.

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Consider this….If a lawsuit does occur, regardless if you are represented by an attorney or not, if you are sued by a creditor and you have no money available to settle that lawsuit you will end up with a judgment or a very high monthly payment plan.

The problem with the attorney model is that for the first 6-18 months a majority of what should be accumulated for settlements are being used to pay your retainer fees and unless you can come up with money to settle that lawsuit, you will most likely end up in a payment plan or with a judgment. A high payment plan will make it impossible for you to continue to accumulate funds to settle your other accounts and you will most likely have no choice but to file bankruptcy.

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Those circumventing the laws put in place to protect you by charging advance fees are not concerned about you as much as they are concerned about profits and in all likelihood don’t care how the program turns out as evidenced by their charging upfront fees – a practice now well recognized to be a detriment to your success. The truth is, in nearly every case when dealing with a “national law group” the attorneys subcontracts the work back to the debt settlement companies anyway. The only way to have an actual lawyer work on your debts without that attorney violating the new debt relief rule is to hire a local attorney.

Until now, the weakest link for Performance Based companies has been defending creditor lawsuits. Consider this also….when enrolled in a performance based debt settlement program and you are sued by a creditor, the debt settlement company will likely attempt to settle that lawsuit before the allotted time to file an answer (typically 20 days). The settlement company has no leverage to negotiate a decent settlement and typical settlements at that stage of a lawsuit can range from 80-90% of balance and again, if the consumer is not able to come up with the additional money a high payment plan must be accepted.

In your research, be sure to deal with a company willing to discuss the risks associated with any debt settlement program and ask how they plan to overcome them. Now that you are aware you can be sued for unpaid debt, you should also know that lawsuits are routinely settled out of court and the key is to have funds accumulated for a settlement while having full attorney representation to defend you.

The Hyatt Debt Settlement Legal Plan is the first legal expense plan designed to provide full legal representation for consumers sued by a creditor. The plan is not a reimbursement plan, has no co-pay, no deductible and absolutely no limits. Combined with a performance based debt settlement company, this coverage allows the consumer the ability to accumulate as much funds as possible towards settlements and provide complete attorney coverage when sued by a creditor.

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For more information about the Legal Expense Plan visit www.veritaslegalplan.com or ask your Debt Settlement Provider to contact us about making the plan available to you.