After you fall behind in payments for an unsecured debt, like credit card, department store, or medical debt, the creditor might send the debt to a collection agency. Creditors hire these third-party companies to go after you for the money you owe.
The first thing you should do if you’re facing aggressive debt collectors or a collections lawsuit is to figure out if you need to hire a lawyer. Here are a few instances when you should consider hiring an attorney:
- You need help negotiating a settlement with a collection agency. A lawyer can help you settle your debts and advise you about the tax consequences of any forgiven debt.
- You think the agency violated the Fair Debt Collection Practices Act (FDCPA).
- You’re facing a collections lawsuit and have a valid defense or counterclaim, or you think the creditor won’t be able to prove its case.
Before you hire a lawyer to help you settle your debts or fight a collections lawsuit, you should do your homework. Not all lawyers are the same, and finding the right one for your issue can be a challenge.
How to Find a Debt Relief Lawyer
Here are a few ways to locate a competent lawyer to help you with a debt issue.
- Use the Find a Lawyer tool on Lawyers.com
- Ask your relatives, co-workers, and friends for a referral. You can also ask for a referral from a lawyer who has assisted you with another matter.
- Check the county or state bar association where you live.
- Look to your prepaid legal plan (if you have one). The plan will direct you to an attorney who can review your case for free and offer services at a reduced rate.
- Search online directories. Review the directories that give a lot of information about each lawyer.
Picking the Best Debt Lawyer for Your Situation
Once you get several names of recommended debt lawyers, set up a consultation with each one. Sometimes you’ll be able to speak with the attorney over the telephone, while other times, you’ll need to visit the attorney’s office and have a face-to-face meeting.
At the consultation, ask each lawyer about:
- their experience with your type of debt issue
- how much they charge
- what services the fees cover, and
- how the attorney will update you about what’s happening with your situation.
Ensure you get satisfactory responses to all your questions before you decide who to hire. While many debt relief attorneys will work hard to represent your interests, others promise results they can’t realistically deliver.
How Much Does It Cost to Hire a Debt Lawyer?
A debt relief attorneys' fees depend largely on the service you need. For example, to negotiate with your creditors or provide some other form of debt relief services, a lawyer might charge:
- an hourly rate, typically $125 to $350 per hour
- a flat fee per creditor or debt (fees average from $500 to $5,000 for more complex negotiations)
- a fee based on your debt load, usually a percentage of how much debt you have, or
- a fee based on how much the settlement saves you (generally, a percentage of the money you'll save with the settlement).
If you need a lawyer to help you file for bankruptcy, the lawyer usually charges a flat fee. How much attorneys charge for bankruptcy services varies by district and state. For a Chapter 7 bankruptcy, fees from about $1,200 to $2,500 are typical, but you might find a lawyer willing to represent you for less than $1,000. A Chapter 13 bankruptcy will usually cost a few thousand dollars or more. Ask for details on exactly how much you’ll have to pay.
Once you’ve chosen a lawyer and agreed to the fees, you and the lawyer should sign a retainer agreement (sometimes called a "fee agreement"). The agreement should detail what services the attorney will provide, how much they'll cost, and how you'll pay for those services.