How to Use Lawyer-Based Debt Reduction
If you're considering hiring a lawyer to help reduce your debt, keep in mind that there is nothing that a lawyer can do that you can't do yourself. No lawyer can magically erase your debt. Nor can a lawyer remove negative information from your credit report. The main benefit of hiring a lawyer is to save yourself the time it would take to do the work yourself. By hiring a lawyer, you can leave the research and the paperwork to a professional.
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Instructions
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Find a reputable lawyer to handle your case. Contact your state's Bar Association, which has a list of attorneys in good standing and can refer you to one who specializes in debt reduction.
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Check with the Better Business Bureau for complaints against the lawyer.
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Meet with the lawyer. Ask lots of questions about his experience and success rate in negotiating with creditors. What are his fees? If he's unsuccessful, will you still have to pay him?
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Get everything in writing, including the fee structure and what the lawyer promises to do on your behalf.
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Give the lawyer your list of creditors, debts and any other information required to proceed with your case. The lawyer will negotiate with your creditors on your behalf to reduce your debt.
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Tell your creditors, if they call, that they must deal only with the lawyer. They may not continue to contact you directly.
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If you don't hear from your lawyer for over a month, call and ask for an update. The lawyer should keep you informed of any progress in your case.
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Tips & Warnings
Before paying, ask for a fully itemized bill. Check that the fees are not greater than what you had agreed to pay.
Any debt-reduction agreement will appear on your credit history and can reduce your credit score. The IRS considers forgiven debt a form of income. You may have to pay income tax on that amount.
