Legal Guide

The rights of the consumers - Hiring a lawyer vs. Debt Settlement Company

Law differs from nation to nation, and at times it also varies from region to region in a few countries. In the same way, even debt consolidation law and its amendments are different in different countries depending upon their legislative policy. Debt consolidation is a type of low-interest loan taken to pay off all the existing loans with varying interest. The loan may be secured or unsecured. Everything from the process of application to the repayment of debt consolidation loan is listed in the debt consolidation law. The penalties and actions to be taken in case of failure of repayment of the loan are also mentioned in the same. The rights of both funding institution/authority and the consumer are mentioned in the Law.

The following are some of the rights of the consumers:

No threatening calls/messages: The collection authority has any right to threaten any of their debtors in any way as this a part of violence and mental torture to the debtor. This type of collection method is totally illegal. However, if a collection authority sues the debtor for his pending dues and wins the lawsuit, then there are high chances that the court announces judgment against the debtor.

Following the call timings: It’s a normal thing to get a call from the collection authority, requesting or reminding debtor for repayment of the dues. However, they do not have any authority to call at unusual timings like late night /midnight or early morning. The Privacy of a debtor should be respected and also repetitive calls in a day are not advisable legally. Also if the debtor requested in written or verbally not to contact him at his workplace or during his working hours the collection authority has to stop contacting him accordingly.

No Abuse: Harassing a debtor through verbal abuse is strictly against the debt consolidation law. None of the collection representatives has the right to use slang language or use bad words for the collection purpose. The authority cannot falsely imply that the debtor is a criminal as he has failed to repay the loan.

Maintaining secrecy: The collection authority has the right to call the debtors friends or relatives or any other people who know the debtor in order to get debtors current information. But the collection agency does not have the authority to disclose any of your debt details apart from the debtor’s attorney or selected family members like spouse or parents.

The above are some of the key rights of the debtors/consumers. However, the debtors can hire attorneys/layers or use services of debt settlement companies in order to manage their expenses and successfully repay their debts.

Hiring a lawyer vs. Debt Settlement Company

Many times, it becomes difficult for the debtors to maintain a balance between their existing expenses and focusing on repayment of the consolidation loan. Due to this reason, they may hire an attorney or approaches a debt settlement company in order to find him in the whole process of repayment of his debts and advising him on other financial decisions.

A debtor can hire an attorney if he is unsure about negotiating his settlement amount and analyzing his financial ups and downs. The lawyer will be responsible for further decisions of payment of the loan. The lawyers will always give the client the best advice in regards to his loan repayment. He will make sure that if any illegal practice is done by the collection agency to collect its debts, a complaint regarding the same is lodged. He can give you proper advice as to go for settlement of debts or ask for any negotiations or opt for the option of filing a bankruptcy. The lawyer will give all his time and efforts in finding ways and means to reduce the burden of the client's loan, unlike the debt consolidation companies who just try to convince to hire their services. Also, the attorney will defend his client if he is sued. He will have full focus on his client as he does not have a huge client database like the debt settlement companies. However, it is very important to choose a lawyer wisely. Many unskilled lawyers in the market may keep taking their fees regularly and act carelessly in terms of the client's issues.

On the other hand, there are various debt settlement companies which guide debtors on the final settlement of the loan. Today various offline and online companies offer such services. It is advisable to approach the leading companies as it involves critical financial decision; is one of the leading service providers in this field. Debt consolidation companies usually assure the debtors that the will be able to convince the debtor's collection authority to make the final settlement of the loan at a very low amount compared to the amount due. Usually, they convince the debtors to pay the loan amount to their firm which they would otherwise pay to the collection agency. These payments include the charges of their services and also the future savings of the final repayment of the loan. Once enough money is collected the debt settlement companies make an offer to the collection authority on behalf of the debtor. This amount is less from the amount which is actually saved by the debtor. Once the collection authority agrees at a lump sum amount the debtor’s loan is paid off and the remaining amount is returned to the debtor after deducting their contingency fee, service charges, set up charges and any other charges if included.

Hence, both lawyers and debt settlement companies have their own way of working and negotiating. A debtor can choose the services depending upon the various factors he is looking for. It is not necessary that a debtor has to select one of them! Debtors can pay off their loans on their own depending on the option they want to select. All debtors may not be willing to pay service charges to the attorney or settlement companies and save the same for repayment of debts.

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