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January 28th, 2009

You Can Negotiate With A Collection Attorney

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If you’ve fallen behind on making your credit card payments and are exploring debt settlement, you may find yourself being forced to work with various collection agencies. While most consumers can deal with the persistent phone calls and letters by many collection agencies, some become terrified when contacted by a collection attorney. Panic begins to set in as thoughts of lawsuits and wage garnishment float through their mind.

Most collection attorneys operate in the same manner as traditional collection agencies. The primary difference is the collection agency is owned and operated by an attorney or law firm. The phone calls you receive will almost never be by an actual attorney and will instead be by a collection agent hired by the attorney or law firm to make outbound calls like any other collection agency.

While the collection process may be the same, the strategies used to collect money will be different when you encounter a collection attorney. Communication you receive will be on attorney letterhead and threats regarding possible legal action are common. For those two reasons, collection attorneys can be highly effective in collecting on old debts.

Will they actually sue you?

The most important thing you can do when you first encounter a collection attorney that as been retained by one of your creditors is to determine the state in which the collection attorney is licensed to practice law. If the attorney is not licensed in your state, the original creditor most likely did not hire the collection attorney to pursue legal options. Otherwise, they would have hired an attorney located and licensed in your state of residence.

In most cases you will find the collection attorney is not licensed to practice law in your state and is simply no different than any other collection agency that may be trying to collect on a debt.

What if they are licensed in my state?

In the remote chance the collection attorney that does contact you practices law in your state and they send a notice that the original creditor has authorized them to explore legal options, there is a greater likelihood of a lawsuit. Like any collection agency, however, the attorney’s goal is to collect as much of the debt as possible with as little cost and effort as possible.

With that said, there if debt settlement was your goal, that is still an option.  It is in your best interest to contact the attorney and explain your financial situation and willingness to settle your debts. Since the attorney does have the ability to sue, you’ll find that you have less leverage than if you were negotiating with a traditional collection agency, however, settlements of 50-70% of the outstanding debt are not uncommon.

If you do not have the funds available to settle the account now, you may be able to convince the collection attorney to take monthly payments for the time being in exchange for holding off on any legal action.

About the Author:
Chris Rocks is the Regional Director of the National Credit Federation (NCF), a consumer advocacy group that assists small business owners and consumers overcome debt and credit challenges. He can be contacted by visiting his personal site, GoodCreditLiving.com.

Post written by Chris Rocks

3 Responses to “You Can Negotiate With A Collection Attorney”

  1. Dries Says:
    June 14th, 2009 at 10:38 am

    Wow what an idea What a concept Beautiful Amazing …

  2. Margaret Semen Says:
    June 11th, 2010 at 12:27 pm

    I wrote a similar article on this subject but you nailed it here.

  3. Jackson Wahdan Says:
    June 14th, 2010 at 5:44 am

    This an Fantastic wordpress post, I will be sure to bookmark this post in my Reddit account. Have a good evening.

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  • Chris Rocks is the Regional Director of the National Credit Federation (NCF). NCF is a nationwide membership-based organization that assists consumers recovering from a financial difficulty and those who need a significant increase in their credit score. Chris began his financial services career as a Financial Advisor helping young families with risk management and asset accumulation strategies. It was during that time that Chris realized that many of these young families also needed someone to guide their choices with regards to debt management. He made the transition into the mortgage industry where he first worked as a loan originator and later the Vice President of a small mortgage company. As Chris came across clients who had suffered through financial challenges and saw the difficulty they had in re-entering our credit driven economy, he discovered there was a real opportunity to leverage his unique background and help others. He can be contacted by visiting his personal site, GoodCreditLiving.com.

  • Francine L. Huff is the Publisher and Editorial Director of Super Savvy Publishing, LLC, which provides editorial and publishing services. She is a gifted author, freelance journalist, and motivational speaker who has entertained and motivated a variety of audiences through workshops, panels and keynote addresses. Francine is the author of The 25-Day Money Makeover for Women, which has inspired and motivated many readers to rein in poor financial habits, become good stewards over their money and work toward a debt-free life. She has appeared on a variety of TV and radio shows. Francine previously worked for the Wall Street Journal, where she was the spot news bureau chief, a news editor and a copy editor. She has interviewed a variety of financial professionals about financial issues and strives to present information about managing money in an easy-to-understand format that is accessible to people of all backgrounds and income levels.

  • Karen Lawson is a freelance writer with more than 15 years of experience working in mortgage banking and loan servicing. She holds BA and MA degrees in English from the University of Nevada, Reno.

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