To begin we must understand the debt settlement process. Debt settlement is a process of falling behind on unsecured credit card bills to then later on negotiate a settlement to pay back the balance at a much reduced amount. This avenue can save a debtor upwards of 50% of the debt they have to pay back. Plus they can look forward to becoming free of burdening credit card debts within a couple of years. Now the debt settlement process can be done two ways, either retain a debt settlement company or a credit card debt reduction law firm to enroll you into a debt settlement program. This short article will delve into the differences between the two.

Like everything in life credit card debt settlement has it’s pros and cons. The pros being the large savings of money and time. The cons are going into default on the bills, collection activity and the minimal chance of being sued. A credit card debt relief law firm has more securities to offer than the regular debt settlement company.

Lets first discuss the chance of being sued. To begin I want to let everyone know that it is not commonplace for the collectors to sue, but there is a chance. Over 90% of debtors who go into default will never end up receiving a summons to go to a courtroom. But you want to make sure that if it does happen to you that you are not left out to dry. With a debt settlement company if one of their customers gets sued there is nothing at all they can do for them. It is UPL (unlicensed practice of law) for these companies to either offer advice or contact the collector that is trying to sue their client. Now if that same person was the client of a debt reduction law firm helping them to settle their bills the legislation changes. A law firm by law can still engage in conversation and negotiate a settlement to keep the client out of court. This is a much more favorable method for the collector to get paid as opposed to actually having to go to court.

The next issue of debate involving settlement companies and law firms is how the collection activity is taken care of. Part of the debt settlement process is the client must fall past due in order for the collector to be in position to want to settle an account. Now ofcourse your must understand these creditors are not just going to go away, you will definitely be receiving collection calls to some degree. A debt settlement company can’t do a thing about the collectors attempting to collect the debt. But a law firm can send out an attorney retention letter to force the collectors by law to speak only with the law firm and not the client in in an attempt to collect the debt.

One more issue to think about is that law firms must report to a greater authority in order to stay in business, the State Bar Association. This gives the client more peace of mind that they will be represented properly throughout the debt settlement process. On the other hand a settlement company answers to no one but itself.

Steve Bis is a credit card debt analyst with the US Consumer Advocate, which practices in credit card debt reduction.