Hiring a debt negotiation attorney to settle your unsecured debts can be a wise move on at least two fronts.
First, the debt negotiation process can be fraught with legal ramifications, and having a lawyer handling your situation can certainly alleviate many of these problems.
Second, a debt negotiation lawyer can provide you with a thorough
assessment of your financial situation and help you decide between
bankruptcy and debt settlement before you even begin the process. And
because these lawyers offer both bankruptcy filing services and debt
negotiation services, you can feel more confident that the option that
is being recommended to you is the appropriate one. In other
words, a lawyer who only does bankruptcy filings is likely more
inclined to recommend that option than to send a potential client out
the door to a debt settlement company (even if that may be the better
But before you sign on with a debt negotiation attorney (or a debt negotiation company for that matter) make sure that you understand exactly what services they will be providing. More specifically, what "legal" services and consultations are included in the fee they will be charging.
For example, there is always the possibility that one or more of your creditors will sue you during the debt negotiation process. (Although, this usually only happens if they have the impression that you have something that they can come after if they were to win a judgment against you, like wages they could garnish, or other assets you possess.) If this was the case, would the debt negotiation attorney deal with the legal issues involved with such suits on your behalf without charging you additional fees? Or would these issues be treated as separate legal issues, warranting extra fees? With many attorneys charging upwards of $200 to $300 per hour, it is imperative that you know ahead of time what services are included in the fee you are being charged to negotiate a settlement of your debts.
Unfortunately many people who enter into a debt negotiation program figure that they are somehow insulated from their creditors in terms of collections and lawsuits. Of course, this is not the case. Debt negotiation can be a very confrontational process, and one that requires some keen negotiation skills. (This is why many people opt to hire a debt negotiation attorney or other debt settlement professional to act on their behalf.) Having said that, and as I mentioned earlier, it is strongly recommended that you speak to a bankruptcy attorney prior to embarking on any debt negotiation process.
One of the things that an attorney will explain to you deals directly with collection actions and lawsuits. Unlike the debt negotiation process, filing for bankruptcy does protect you from your creditors through something called an automatic stay. Lawsuits against you, and creditor claims against your assets are stopped immediately under an automatic stay. This is just one example of why you should consult with a debt/bankruptcy lawyer prior to committing to debt settlement. In other words, not only do you need to know all of your debt relief options, you need to know the ramifications of choosing each of those options.
The degree or "level" of debt help that you need really depends on your personal financial situation, and the amount of debt that you are carrying. If you have "done your homework" and are certain that bankruptcy (or an alternative to bankruptcy like debt negotiation) is likely your only solution, then by all means you should be contacting a bankruptcy lawyer.
However, if you are not sure exactly what your best route to debt relief is, I recommend that you start by contacting a credit counselor who will help you assess your current situation and can recommend several options. Although bankruptcy and debt negotiation are appropriate solutions for some people, they should be viewed as the options of last resort. And a qualified credit counselor can provide you with alternative options that may be much more suitable for your situation.