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Can a Debt Settlement Lawyer be better than a Debt Consolidation Company ?

The answer to the above question might surprise you. Since the Federal Trade Commission's regulations that were passed in October 2010, there has been a big push for companies to offer settlements using a debt settlement lawyer.

Typically these law firms make their clients feel more at ease in having them deal with their debt situations. Many of these settlement firms will give the impression that they will handle anything that might arise for their clients including representing them should a creditor decide to proceed legally against them.

They also imply and sometimes out right claim that a debt settlement law firm can actually do a better job than the typical debt consolidation company.

According to a class action law suit filed in the state of New Jersey;

"The law firm of Legal Helpers Debt Resolution, L.L.C. and its individual members, recruits, employs and partners with both front-end lead generators and back-end service companies, financial institutions and other attorneys in New Jersey and other states to provide debt adjustment services creating the impression that these services are to be performed or provided by attorneys."

The suit goes on to say that in fact these services are not truly being done by attorney's nor were they ever intended to be.

In most all instances these law firms are simply providing a name that debt settlement companies and other back end processing companies use to lure in customers. In almost every case the clients never have any contact with an attorney through out the entire process from sign up to finish.

Another reason these debt settlement companies are using names of law firms is to get around the FTC ruling. In that ruling it states that a debt settlement company can't charge any of it's fees until a settlement has been reached. To combat this the companies join with a debt settlemet lawyer and charge their clients retainers and monthly legal fees in advance under the reasons that the law firm is providing legal services and representing them.

According to another law suit filed by the State's Attorney of Illinois;

"21. As of October 2010, at least 1,117 Illinois consumers had signed agreements entitled attorney retainer agreements ("agreements") with LHDR. Consumers believe they are hiring a law firm to provide debt resolution services on their behalf.

22. In fact, Defendant contracts out virtually all debt relief services to a third party operated and staffed by non-lawyers.

23. Defendant charges advance fees which are unfair and in violation of the advance fee ban in the Debt Settlement Consumer Protection Act."

According to the Attorney General as describes in the suit, they have been receiving numerous complaints about Attorney based settlement companies who are supposed to be providing debt relief services when in fact all debt relief services are provided by third parties. Many of these complaints report being charged advance fees and having little or no contact with an attorney. Some have reported not having their debt being settled at all.

According to one law suit filed against a debt settlement law firm the plaintiff was sued by a creditor. The suit states that not only did the law firm fail to answer the suit. They made no attempt what so ever to contact them to even work out a settlement before it went to court.

The suit claims the plaintiff received a communication from the debt settlement lawyer stating that the client has not paid for the law firm to answer the lawsuit, but rather to manage and settle debts.

So what exactly are you paying for? Well it seems you are paying retainers and legal fees up front as well as settlement charges, to do exactly what a debt consolidation company can do. Settle your debts.

To find out which of the debt consolidation programs might be best for you, speak to a debt analyst for free. They can go over all of your options with you.

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