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For starters let us put in plain words what debt settlement is. Debt settlement is a process of going into default on unsecured credit card debts to then later on negotiate a settlement to pay back the original debt balance owed at a much lesser amount. This procedure can save a U.S citizen close to 50% of the debt they must repay. Also they can look ahead to becoming free of burdening credit card debts within two years. This process can be handled one of two ways, either hire a debt settlement company or a debt settlement law firm to enroll you into a debt settlement program. This writing will touch a few important differences between the law firm vs the company.

Like everything in life debt settlement has it's pros and cons. The good thing is the enormous savings of money and time. The bad parts are going into default on the debts, collection activity and the possibility of a lawsuit. A law firm that practices debt settlement has better protections to offer than the normal debt settlement company.

Lets first talk about the threat of getting sued. To begin I want to let everyone understand that it is not commonplace for the collectors to sue, but there is a chance. Over 90% of consumers who fall into default will never end up receiving a summons to go to court. However in the case that you get sued you want to guarantee yourself that the organization you hire can still help you out. With a debt settlement company if one of their clients gets sued there is not a thing at all they can do for them. It is UPL (unauthorized practice of law) for these companies to either offer advice or contact the creditor that is trying to sue their client. Now if that same consumer was the client of a law firm negotiating for them to settle their bills the law changes. A law firm by law can still call and negotiate a settlement to keep the client out of court. This is a much more acceptable avenue for the collector to get paid in contrast to actually bringing the debtor to court which cost hefty sums of money and time for them.

The next issue of debate between settlement companies and law firms is how the collection activity is handled. Part of the debt settlement procedure is the client must fall past due in order for the creditor 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 for sure be getting collection calls to some degree. A debt settlement company can't do a thing about the collectors calling. But a law firm can release to them an attorney retention letter to make the collectors by law to deal only with the law firm and not the client in in an attempt to collect the debt.

One more issue to consider is that law firms have to be subjected to a superior authority in order to continue practicing law, the Bar Association. This gives the client additional peace of mind that they will be represented appropriately throughout the debt settlement procedure. A debt settlement company answers to no higher authority.

Steve Bis is a debt analyst with the US Consumer Advocate, which practices debt relief.