How Does a Debt Settlement Law Firm Work?

I have been working in the debt settlement industry for almost ten years now and have very extensive knowledge as to how it works. Before we begin I want to say this will be a rather long article and if you are not serious about finding a solution to your debt problem then stop reading now. The purpose of this article is to explain to you first how debt settlement works and what the process entails; both the good and the bad. Next I will explain the differences between how a debt settlement law firm works and how it compares to a standard debt settlement company. There are many differences between how this process is handled by the two. Because of this debtors should learn these differences before enrolling into any program. Many people may already know how a debt settlement company works but have no clue as to how a law firm works and this article will explain just that.

First of all, I would like to state that debt settlement as a means of credit card debt relief is not for everyone; some people simply do not have the right state of mind, while others may benefit more from bankruptcy.

To begin with I would like to go over the purpose of credit card debt settlement and how the process works. The purpose of debt settlement is for the debtor to get out of debt quickly without having to file bankruptcy and save a lot of money in the process. The goal of the debt negotiator is to negotiate a one time lump sum payment on the debtors’ behalf at a far reduced amount than what the debtor currently owes.

These benefits are tremendous. The debtor could save themselves close to half of what they currently owe and be out of debt in a few years. However as with most things in life there are drawbacks to this process and there is no way to avoid them.

In order for any creditor to be willing to negotiate a debt settlement on a debt the account must fall into default first. There are no creditors in the world willing to negotiate when you are current and up to date on your monthly minimum payments. If they feel you can maintain your monthly minimums than this is precisely where the creditors want to keep you. This is where their profit is made, by just paying the minimum each month you will be in debt for over thirty years, even if the interest rate is not all that high. If your rate is above 20%, you will be stuck in debt for well beyond thirty years and payback the creditors well over ten times the original balance alone in interest. That is exactly where they want you!

So understandably they will not negotiate with you when you are current and they feel they can still bank on your minimum payments for years to come. So the only way to ever negotiate is to fall behind on the monthly payments. Naturally once you do this you will be negatively affecting your credit score and will also be receiving calls from collectors; this is what may put some people off from doing debt settlement, thus why I stated above this process may not be for everyone.

For those people already behind this will not make a difference and their credit will not be damaged any more than it already is, however for those who are current this will adversely affect their credit. It is quite a shame that this point alone may stop some people from using debt settlement; thus dooming them to being financial servants to the creditors for decades to come.

You must also be made aware that this process in the end will begin to help rebuild your credit. Thirty percent of your MyFICO credit score is made up of your debt to credit ratio, which will look a lot better after you get out of debt. Additionally the negative remarks from falling behind will not hold much bearing on your credit score after two years. Your credit score is only a snapshot in time and only uses the last two years of payment history to determine the score.

Now during the process of falling behind your goal is to save up as much money as possible in the quickest possible time. This money is then used later on to pay off the settlement that is negotiated by the debt negotiator. The faster someone looks to save money and complete this process the better for many reasons. For one the faster you are out of debt the more money you stand to save and the less risk you take from the negative aspects of settlement such as lawsuit and further damage to the credit report.

This brings us to the title of the article “How Does a Debt Settlement Law Firm Work?” As I explained above there are great benefits to debt settlement such as saving lots of money and time; and there are also some downsides such as collection calls and the possibility of a lawsuit.

The main differences between how debt settlement is handled by a debt settlement law firm and standard debt settlement company is how they deal with the negative drawbacks. A law firm has much more legal power and is set up correctly to comply with their states’ laws.

Collection Calls

One of the first major differences in how debt settlement is handled has to deal with collections calls. When you first fall behind and your debt is still in the hands of the original creditor there is nothing legally that can be done to stop them from calling. However once the creditor passes the account off to a third party collection agency which will happen anywhere between 3-6 months after falling behind things change. Legally once in the hands of the collectors a law firm will have the power to have all calls to their client stopped, and if the collector continues to call and harass the client legal action can be taken against that creditor seeing as they will be in violation of the FDCPA (Fair Debt Collections Practices Act).

So the client’s first advantage by using a law firm will be a much decreased activity in collection calls, and this is very important for some people. Any regular debt settlement companies that claim they can stop the calls are simply not telling you the truth and you should be very weary of them because of this.

Lawsuits

The next major advantage a law firm has concerning debt settlement is how a lawsuit can be handled. In case you are not aware once you fall behind on your credit card debts the creditors/collectors do hold the legal right to pursue you through the courts to collect the debt. However I will mention, that suing is not the mainstay of the collectors and is not exercised very often; reason being it simply costs too much money and time on the creditor’s behalf with no guarantee of getting any money even if they were able to obtain a judgment anyway.

The advantage the law firm has is they can still legally contact and negotiate a settlement with your collector after they have issued a summons to court. A debt settlement company does not have this legal power. The collectors are very willing to negotiate a settlement even after the summons has been issued; they realize they may get very little if anything regardless, so being contacted by a reputable law firm who is willing to offer them money and settle the debt without wasting any time or money with going to court is very beneficial to the collector.

If you get sued and you only have a standard company representing you, you can expect to go to court and try to figure it out yourself. This often results in a judgment for the debtor!

Correct Legal Set Up

Perhaps the biggest advantage the law firm has over a company is how they are set up. The vast majority of debt settlement companies are not legally allowed to work in all the states; many are not even set up correctly to operate in their own state.

The states’ attorneys and the FTC (Federal Trade Commission) are cracking down severely on these companies and shutting them down as fast as possible. When this happens often times the company does not have the money to payback its clients for the fees they paid to a company that will no longer be in business and can no longer help to settle their debts. Now the debtor will be left holding the bag having paid thousands in fees but still be stuck in debt, and this nightmare scenario happens more than you may think. Thus making law firms a much, much safer option!

Another issue that many people have with debt settlement companies is they will not disclose how this process works and will simply sugar coats things and preach about the great benefits but never mention one downside. A law firm legally must disclose everything about how this works before being able to enroll anyone into any structured payment plan. A lot of companies do not have your interest at heart and will say whatever it takes to get you signed up even if they are fully aware that they are setting you up to fail.

Which brings me to my last point; a lot of unscrupulous companies will allow their clients to sign into a program and pay whatever they want and put them into programs that are set up for much longer than they should be. By stretching a debt settlement program out the savings will decrease and the potential for a lawsuit will increase. These companies cannot legally give the client advice or assistance if they get sued; it is considered unlicensed practice of law and this is what I mean by them knowing they will be setting you up to fail. If you can’t get this process done within three years, four max in special situations, then you should seriously consider bankruptcy. A law firm will be strait up and tell this to you, where many shady companies will keep trying to sign you up.

I really hope after reading this article you feel enlightened and now have a much better understanding of how debt settlement works and how a law firm can advantage you the most. I know for the most part I have been focusing on the negative aspects of debt settlement, but I feel it is important for people to understand both the good and the bad, allowing them to make an educated wise financial decision on how to get out of debt. But you must realize just how powerful the benefits of this process are! Saving close to half of what is currently owed and becoming debt free in a few years will be so beneficial to your current and future financial well being. Credit card debt has a way of destroying people’s finances and their lives and debt settlement is the perfect alternative for those who want to escape debt quickly and avoid the embarrassment of filing for bankruptcy.

If you are curious as to whether using a debt settlement law firm can benefit your financial situation then I invite you to follow the link below in the signature box and fill out an application. I welcome the opportunity to review your personal and unique situation to see if debt settlement will be the right fit for you.

How to Hire Law Firms With Ease

Legal matters are something that strike the fear of God in most people’s hearts, because of the complications involved, not to mention the astronomical legal fees one can incur. Legal matters, however, can happen anytime, anywhere and while people know that they must be prepared for anything, it doesn’t erase the fact that it can be quite a daunting prospect and as such, something to be avoided as much as possible.

However, fears of anything new and unfamiliar can be conquered with a proper understanding and learning of the matter. Once you understand the ins and outs of hiring law firms you’ll find that there was actually nothing to be apprehensive about. You need to hire lawyers who are well-versed in the language of litigation.

First of all, determine all the possible reasons why you need to hire a law firm. Of course in addition to wanting your tough legal problem solved, you may also want to hire a law firm because you want to augment the legal team you already have in place to increase your chances of winning your case and at the same time let your adversary know that you are determined to win it. Hiring the best law firm also increases your confidence about winning the case because you have a lot of legal experts behind you. And more importantly, you want to be able to win your case without causing too much of a dent in your bank account.

The next thing you need to do is research. Start with legal directories that will help you shortlist the best lawyers within your area complete with phone numbers and background information. You can also try researching online for law firm rankings, that rank the best law firms according to practice, diversity and region. Of course this will all depend on what type of case you have and the details involved.

A law firm’s expertise is based mostly on the fact that they hire the best graduates from top law schools. Since a lawyer’s core worth is based on his intelligence, knowledge and experience, you will increase your chances of winning your case since they will be updated on all the latest nuances of the law and be able to keep up their end of the defense with facts and figures relevant to your case.

While price is a major consideration, remember that the costs you incur will depend on the size of the law firm you need and want to hire. Solo practitioners usually entail lower costs and fees, small firms usually entail lower costs and more personal interaction, mid-size firms usually have more legal resources and therefore the ability to address your legal issues more effectively and large firms are what you need for larger and more complex legal concerns. When you go online, the best legal websites will have all the necessary information posted.

You will also need to check if the websites have posted their accreditation and certification and have very thorough information about their lawyers’ specialties. There are law firms that allow you to download reports and white papers on very popular legal topics, ones that their previous clients have been through so you can get more insights on your particular case and how it could turn out. The more information you have, the more empowered you feel so go for sites that also offer tips and advice on going through difficult legal matters and how to deal after the smoke clears.

And lastly, go for law firms that are able to explain things in a language you’ll understand. Forget about law firms that go technical, it is important to find one that provides personalized service and are very responsive – one who will actually return your calls because they understand time constraints and value your time as much as they value theirs. While most law firms put on an impersonal fa├žade that they mistake as professionalism, a true indication of a competent and able law firm is one that shows the human side of the legal profession. Clear cut and straightforward about the law but at the same time, showing a sympathetic side.

It is easy to feel daunted or intimidated when you enter a legal situation where you need to hire law firms to get you out of it. As long as you know what you need and want and what to expect, hiring lawyers to champion your cause won’t feel so challenging.

Top Ten Reasons Why Law Firms Should Consider Selective Legal Outsourcing

In the last quarter of 2008 America faces economic challenges never imagined even a few months ago. How will businesses manage and survive the limitations on credit, demand and growth? How does the economic downturn impact lawyers and law firms which service the business community?

It is an obvious fact that businesses can only look at modifying two revenue streams, income and expenses, in order to increase profitability. If income is down and not expected to increase markedly in the near term, clients of law firms will take the hatchet to expenses in order to survive. Legal fees will be under extreme scrutiny. Legal outsourcing, while still a nascent industry, is gaining momentum, being considered in more corporate boardrooms. As the pressures to outsource build, lawyers ponder whether they should embrace outsourcing legal work offshore or resist it. In the face of global economic challenges coupled with the increasing loss of American jobs why would a U.S. law firm want to even consider legal outsourcing? Are there valid reasons why targeted legal outsourcing should be considered by every U.S. law firm?

Several weeks ago I received an email from a lawyer who was considering outsourcing some of the legal work of his law firm. Facing resistance and challenges from many in his law firm who wanted to maintain the status quo, he asked for my advice as to what he should tell his partners. Why should the firm outsource legal work offshore, a practice seen by some as adventuresome and risky, instead of staying the course, doing it “the way we have always done it.” I answered him with the top ten reasons why every law firm should consider selective legal outsourcing:

1. PRUDENT, TARGETED OUTSOURCING WILL RESULT IN REDUCED LAW FIRM OVERHEAD

Outsourcing some legal work to qualified providers in India will result in significantly lower overhead to the outsourcing law firm. In assessing the comparative costs the law firm will be wise to carefully calculate the real costs of employing one lawyer or paralegal. Those costs include salary and bonus, health insurance, vacation and holiday pay, sick time expense, FICA, office space and equipment for the lawyer, paralegal and secretarial staff assigned to that lawyer, pension and profit sharing, auto and parking expense, CLE seminar costs, and other employment benefits such as disability and life insurance. The real annual cost of one lawyer earning a base annual salary of $150,000-$175,000 is more likely in the range of $250,000 to $300,000 per year. NONE of these customary expenses accrue to a law firm utilizing supplemental offshore legal providers.

2. OUTSOURCING WILL ENHANCE LAW FIRM EFFICIENCIES

Selective outsourcing will improve the efficiency of your law firm. Because Indian lawyers work while American lawyers sleep, it will be like your law firm has a full time, fully staffed night shift. Some work can be assigned by a partner at 6 p.m. in the evening and the completed task on his desk when he arrives at the office the next morning. Litigation cases will move more rapidly through the court system with less need for extensions of time.

3. OUTSOURCING WILL RESULT IN IMPROVED LAWYER MORALE

As a child not many of the sermons I heard from my pastor stuck with me. But one, when I was fourteen years of age still rings a bell. He said: “Ninety percent of any worthwhile endeavor is pack work, plugging, day in and day out. Only ten percent of our work tasks are necessarily fun and enjoyable.” I have always remembered that statement. In more than two decades as a trial lawyer I enjoyed strategizing and trying cases to juries. But I did not necessarily enjoy all of the trial and deposition preparation, research and briefing, document review, and other mundane essentials of the practice of law. A law firm which incorporates outsourcing into its practice will inevitably foster more contented lawyers who devote their time and energies to the more challenging, fun and rewarding parts of the practice of law. Only the “chore” legal work is outsourced with the “core” work staying onshore. This allows more time for client interaction and development by the firm’s lawyers.

4. OUTSOURCING WILL RESULT IN OVERALL SAVINGS IN LEGAL FEES TO CLIENTS

Clients of law firms, particularly business clients, are searching far and wide for ways to cut their legal expenses. Many ask why they should pay, for example, $200 to $300 hourly for document review. Gone are the days when legal bills are simply paid without scrutiny. Likewise, the annual increases in hourly rates will not be well received by clients looking to cut costs. Wise law firms put the interests of their clients above their own. What is good for the client will ultimately be good for the law firm itself.

5. THE RULES OF PROFESSIONAL CONDUCT REQUIRE OUTSOURCING CONSIDERATION

The Rules of Professional Conduct of require that: a. “A lawyer should seek to achieve the lawful objectives of a client through reasonable permissible means.” (Rule 1.2) b. “A lawyer shall explain a matter to the extent reasonably necessary to permit the client to make informed decisions about the representation.” (Rule 1.4 b) c. “A lawyer shall make reasonable efforts to expedite litigation consistent with the interests of the client.” (Rule 3.2)

A lawyer is required to explore and discuss with his client all reasonable means of accomplishing the client’s objectives. A lawyer is not permitted to charge an unreasonable or excessive fee. It would seem that a lawyer is arguably required to discuss selective outsourcing as a way of reducing the client’s ultimate fee obligation and furthering the interests of the client.

6. OUTSOURCING “CHORE” LEGAL WORK PROMOTES CLIENT RETENTION AND DEVELOPMENT

Clients have long questioned ever-increasing legal fees for basic, “chore” legal work. However, they felt as if they had no alternative. They needed the legal representation and wanted good quality work. As there was not a significant degree of fee variance from law firm to law firm, clients tended to “stay put.” This trend is beginning to change as clients learn that they have options. Lawyers who outsource selectively are reporting a more contented, loyal client base. Clients who perceive that their lawyers are looking out for the entirety of the their interests, including fee costs, tend to remain committed to their existing law firms and even refer other clients (whose lawyers refuse to outsource).

7. THE COMPETITION IS OUTSOURCING

If your law firm is not outsourcing, be certain that your competition is. On August 21, 2007 Bloomberg. com reported that even long-established AMLAW 100 law firms like Jones Day and Kirkland & Ellis are outsourcing under pressure from clients.

8. OUTSOURCING U.S. LAW FIRMS MAY CHARGE A REASONABLE SUPERVISORY FEE

It is reasonable and acceptable for U.S. law firms outsourcing legal work offshore to charge a reasonable supervisory fee in conjunction with outsourced legal work. It is axiomatic that a lawyer who outsources legal work, whether to an associate, contract lawyer or offshore provider, ultimately remains responsible to his client for the quality and timeliness of delivery of the legal product. If a lawyer assigns the research and writing of a brief to a junior associate, the assigning lawyer will not customarily submit the final work product to the court without review and supervision. So it is with offshore legal outsourcing. Published ethics opinions of the San Diego, New York and American Bar Associations indicate that a lawyer who outsources offshore may charge a reasonable supervisory fee.

9. CLIENTS ARE INSISTING ON SELECTIVE OUTSOURCING TO ACHIEVE COST SAVINGS

Clients talk to one another. Executives of major companies golf and have lunch with one another. Corporate General Counsel attend meetings and CLE seminars, sharing information and ways to increase efficiencies and cut costs. They know about offshore outsourcing and the dramatic cost savings that can be achieved. It is unacceptable, therefore, to ignore legal outsourcing and, as one managing law firm partner told me, have “no appetite” for it.

10. OUTSOURCING WILL HAPPEN.

Doing nothing is not an option. Some are outsourcing. Many more are considering it, whether prompted by keen business sense or financial realities. Outsourcing is like a large, ominous wave a few miles offshore. It is preferable to surf the wave than wait to be engulfed, overwhelmed by its power and left wondering what happened.

British economist Herbert Spencer is credited with originating the term “survival of the fittest” in the mid 19th century. Although also having application to biology, Spencer applied the concept of survival of the fittest to free market economics. In a free market, companies and businesses will do what is necessary to survive. If that means outsourcing some U.S. legal jobs for the greater good of survival of the entity itself, then so be it. The model of ever increasing salaries and expenses for law firms followed by even higher legal fees charged clients cannot sustain itself any longer. Legal outsourcing is here to stay. The wise will take notice, survive and flourish.