First and foremost let me briefly explain what debt settlement is. Debt settlement is a process of defaulting on unsecured bills to then later on negotiate a settlement to pay back the debt balance owed at a much reduced amount. This procedure can save a debtor close to 50% of the debt they owed. In addition they can expect to become free of burdening credit card debts within a couple of years. Now the debt settlement process can be done two ways, either employ a debt settlement company or a debt reduction law firm to enroll you into a debt settlement program. This brief article will discuss the differences between the two.

Like most things in life debt settlement has it's ups and downs. The good thing is the large savings of money and time. The bad parts are going into default on the bills, collection activity and the possibility of a lawsuit. A law firm that practices debt relief has more advantageous protections to offer than the fly by night debt settlement company.

Lets first discuss the possibility of being sued. To begin I want to let everyone know that it is not common practice for the creditors to sue, but it is a possibility. Over 90% of consumers who end up going into past due status 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 clients gets sued there is not a thing at all they can do for them. It is UPL (unlicensed practice of law) for these companies to either offer advice or contact the creditor attempting to sue their client. Now if that same individual was the client of a debt reduction law firm assisting them to settle their debts the law changes. A law firm by law can still contact and negotiate a settlement to keep the client from ever having to step into a courtroom. This is a much more acceptable method for the collector to get money in contrast to actually bringing the debtor to court which large amounts of money and time for them.

The next issue of debate involving settlement companies and law firms is how the collection activity is handled. Part of the debt settlement procedure is the debtor 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 assuredly be getting collection calls to some level. A debt settlement company can't do a thing about the creditors calling. But a law firm can send out a statement of attorney retention to make the collectors by law to have contact only with the law firm and not the client in in an attempt to collect the debt.

One more subject to think about is that law firms must answer to a superior authority in order to continue practicing law, the 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.