When Do You Need a Debt Settlement Attorney?

Consumers looking to settle their debt can negotiate with the help of a debt settlement attorney. These legal professionals specialize in helping clients reduce the amount of debt they owe. An attorney can offer legal advice in addition to helping negotiate a settlement.

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    Jennifer Schell

    Jennifer Schell

    Financial Writer

    Jennifer Schell is a professional writer focused on demystifying annuities and other financial topics including banking, financial advising and insurance. She is proud to be a member of the National Association for Fixed Annuities (NAFA) as well as the National Association of Insurance and Financial Advisors (NAIFA).

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    Savannah Hanson, financial editor for Annuity.org

    Savannah Hanson

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    Savannah Hanson is an accomplished writer, editor and content marketer. She joined Annuity.org as a financial editor in 2021 and uses her passion for educating readers on complex topics to guide visitors toward the path of financial literacy.

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  • Updated: May 4, 2023
  • 5 min read time
  • This page features 9 Cited Research Articles
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APA Schell, J. (2023, May 4). When Do You Need a Debt Settlement Attorney? Annuity.org. Retrieved June 7, 2023, from https://www.annuity.org/personal-finance/debt-relief/settlement/when-do-you-need-an-attorney/

MLA Schell, Jennifer. "When Do You Need a Debt Settlement Attorney?" Annuity.org, 4 May 2023, https://www.annuity.org/personal-finance/debt-relief/settlement/when-do-you-need-an-attorney/.

Chicago Schell, Jennifer. "When Do You Need a Debt Settlement Attorney?" Annuity.org. Last modified May 4, 2023. https://www.annuity.org/personal-finance/debt-relief/settlement/when-do-you-need-an-attorney/.

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What Is a Debt Settlement Attorney?

If you’re overwhelmed by debt that you don’t feel you can pay, you may want to consider debt settlement. Debt settlement is a form of debt relief that involves negotiating with creditors to pay a lump sum settlement that’s less than you owe.

A debt settlement attorney is a legal professional who specializes in negotiating debt settlements. An attorney can negotiate with your creditors on your behalf and can advise you on how to deal with debt collectors.

In addition to helping you negotiate with your creditors, debt settlement attorneys provide other benefits related to debt relief. These can include helping you organize your personal finances, create a budget and control spending, assert your legal rights and stop harassment from debt collectors.

When Should You Hire a Debt Settlement Attorney?

You should think about talking to a debt settlement attorney when your debt becomes overwhelming or if you’re facing legal consequences because of the amount of debt you have.

Settlement works best when your debt has become too large for you to realistically pay off. If creditors believe they can eventually get you to pay off all your debts, they are much less likely to want to settle for less than they’re owed.

If you miss enough payments on your debt, your creditors may try to sue you. Having a debt settlement attorney on your side when facing a lawsuit can be extremely helpful, as they are experts on the legal process and could represent you in court if necessary.

If you’ve already been sued and lost, you might have been given a court-ordered resolution such as wage garnishments or even a lien on your property. In that case, an attorney can advise you on whether you have a good case to dispute the judgment or negotiate to reduce the penalties. 

Finally, many people struggling with debt consider filing for bankruptcy as a last-ditch effort to clear the slate and be free from debt. If you’re talking to an attorney about bankruptcy, you should also talk to a debt relief attorney to get a sense of your options. Debt settlement might be a better option than bankruptcy, as it has a less drastic impact on your finances and your credit score.

Debt settlement may not be the best solution for everyone. If your financial resources are limited, you might be better off seeking advice from a nonprofit credit counseling agency. Credit counselors can’t help you negotiate a debt settlement, but they can help you plan for how to get out of debt as efficiently as possible.

Debt Settlement Lawyers vs. Companies

When it comes to professional debt settlement help, you usually have two choices. You can hire the services of a debt settlement company or reach out to a debt settlement attorney. Let’s look at the pros and cons of both these professionals to understand the differences between them.

Pros and Cons of Debt Relief Attorneys

Debt relief attorneys can offer a unique perspective on debt settlement because of their legal expertise. They may advise you on legal issues relating to your personal financial situation or suggest alternative debt relief methods.

Debt Settlement Attorney Pros and Cons


  • Can give legal advice
  • Can represent you in court
  • May offer alternative debt relief solutions


  • May delegate your case to a staff member
  • Charge costly fees

Pros and Cons of Debt Settlement Companies

Debt settlement companies will help you negotiate with your creditors to reach a settlement for your debt that’s less than you owe. The companies will usually tell you to stop making payments on your debts and instead save the money or make the payments to the company, who will save it for your lump sum settlement.

When the settlement firm reaches a deal with your creditors, you’ll pay the settlement amount. But there’s no guarantee that the debt settlement company will be able to reduce your debt, and your creditors may not negotiate with them at all.

Debt Settlement Company Pros and Cons


  • Settle debts for half of what you owe on average
  • Save consumers an average of $2.64 for every dollar they pay in fees


  • Not all creditors will work with them
  • Cannot give legal advice if creditors sue you
  • Charge costly fees

Top Qualities in Debt Settlement Attorneys

When talking to a debt settlement attorney or law firm, there are a few questions you should ask to determine if this attorney is the right person to represent you. 

You’ll want to find out how large the firm is and how many clients they serve. A proper debt settlement firm will have a handful of full-time attorneys working on cases, so they don’t delegate most of their clients to paralegals or assistants. 

The law firm should also have at least 200 clients in the process of debt settlement. You don’t want to work with a firm that’s mostly involved in bankruptcy or other areas of law. The best firm for debt settlement will always be a firm that specializes in settling debt, and the majority of their cases should be debt settlement.

One way to gauge the success of the firm is to ask how much debt they’ve been able to resolve for their clients. A firm with a strong history of successful debt settlement will have settled at least $10 million in debt. Credit card debt is probably the most common type of debt they’ll resolve, but they may also have experience settling student loan debt, back taxes or second mortgages.

Finally, you should always make sure that you can sit down with an attorney face-to-face before paying any fees. Having the opportunity to ask follow-up questions and ensure that this lawyer is a good fit for you is crucial when you’re dealing with a matter as serious as debt settlement.

What Does It Cost To Hire a Debt Settlement Attorney?

Many debt settlement attorneys structure their fees with some flexibility to represent the unique characteristics of each case. The complexity of your case, the difficulty involved in negotiating with your creditors and the amount of debt you owe can all play into the calculation of attorney fees.

Some debt settlement attorneys will charge an hourly rate for their work or a fee for each creditor that’s involved in the settlement. Others have a fee structure similar to debt settlement companies, where the fees you’ll owe will be a percentage of the debt you have or of the settlement amount.

Most debt settlement attorneys charge on a contingency basis like debt settlement companies do. This means that you shouldn’t have to pay anything in advance. You won’t pay the attorney fees until the attorney reaches a settlement with your creditors.

Please seek the advice of a qualified professional before making financial decisions.
Last Modified: May 4, 2023

9 Cited Research Articles

Annuity.org writers adhere to strict sourcing guidelines and use only credible sources of information, including authoritative financial publications, academic organizations, peer-reviewed journals, highly regarded nonprofit organizations, government reports, court records and interviews with qualified experts. You can read more about our commitment to accuracy, fairness and transparency in our editorial guidelines.

  1. Consumer Financial Protection Bureau. (2017, October 25). What’s the Difference Between a Credit Counselor and a Debt Settlement or Debt Relief Company? Retrieved from https://www.consumerfinance.gov/ask-cfpb/whats-the-difference-between-a-credit-counselor-and-a-debt-settlement-or-debt-relief-company-en-1449/
  2. Diwan Law. (2021, June 23). Attorney vs. Debt Settlement Company. Retrieved from https://diwanlaw.com/debt-attorney-settlement/
  3. McCarthy Law. (n.d.). Top Questions To Ask When Selecting a Debt Settlement Firm. Retrieved from https://mccarthylawyer.com/what-to-ask-when-selecting-a-debt-settlement-firm/
  4. Loftsgordon, A. (n.d.). Lawyer vs. Debt Settlement Company: Which Should I Use? Retrieved from https://www.nolo.com/legal-encyclopedia/lawyer-v-debt-settlement-company-which-should-i-use.html
  5. Richner, J. (2021, September 19). Five Times To Call a Debt Settlement Attorney. Retrieved from https://nationallegal.com/5-times-to-call-a-debt-settlement-attorney/
  6. Tayne Law Group. (2022, May 16). Do You Need a Debt Settlement Attorney? Four Cases When You Do. Retrieved from https://attorney-newyork.com/2022/03/04/do-you-need-a-debt-settlement-attorney-4-cases-when-you-do/
  7. Upsolve. (2021, September 13). Debt Settlement Attorneys: How Can They Help? Retrieved from https://upsolve.org/learn/debt-settlement-attorneys/