Can a law firm be a debt settlement company?

Here’s another red flag that the “law firm” you’re dealing with is really just a debt settlement company: It wants you to pay money for it to negotiate with your creditors but says you’re on your own if you get sued.

What do you need to know about a debt collection lawsuit?

The Lawsuit Begins A debt collection lawsuit begins when the collection agency files a “complaint” (sometimes called a “petition”) in court. The complaint will explain why the collector is suing you and what it wants—usually, repayment of money you owe, plus interest, fees, and costs.

What happens to your taxes when you settle a debt?

Settling a debt, no matter who handles the settlement process, could have tax consequences. The IRS generally considers canceled debt of $600 or more as taxable, and settling debts for less than what’s owed can increase your tax liability depending on your tax bracket and the canceled amount. Consult a tax professional for more information.

What should I do if I have a civil judgment?

Any motions to set aside a judgment must be filed with the judge who entered the original judgment. If you have other debts you are dealing with you time and money might be better served hiring a bankruptcy lawyer to dispose of your debts or at a minimum negotiate a settlement on your behalf. 7. Civil judgments can be appealed

Is debt settlement necessarily a bad thing?

Debt settlement may negatively affect your credit score, but not in all cases. In certain situations, there are ways to negotiate around the seven-year penalty you typically face for settling a debt. In normal circumstances, settling debt will create a negative item in your credit report that sticks around for seven years.

What are my legal rights after debt settlement?

After a debt settlement, you retain the same rights under The Fair Debt Collection Practices Act . For instance, the settlement should be accurately and fully listed on your credit report. Additionally, the creditor or collection agency should follow the proper legal protocol for contacting you and pursuing the debt.

Do debt settlement companies usually charge a fee?

Debt settlement companies may also be known as “debt relief” or “debt adjusting” companies. The companies generally offer to contact your creditors on your behalf, so they can negotiate a better payment plan or settle or reduce your debt. They typically charge a fee, often a percentage of the amount you’d save on the settled debt.

Is it possible to be sued while in a debt settlement program?

Yes, they can-it is possible to be sued while in a debt settlement program. A debt settlement program is nothing more than negotiation with a creditor.