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Beware of Low-Cost Debt Consolidation or Cheap Legal Services

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Beware of Low-Cost Debt Consolidation or Cheap Legal Services

Wooden blocks spell out the word debt in front of finance and accounting paperwork.

Whenever a business owner is confronted with a legal matter or a delinquent debt problem, one of the foundational decisions necessary to address the problem is choosing the right professional service provider to assist the business owner in resolving the critical debt issue(s).

The question is, how do you avoid hiring the wrong lawyer or weak debt consolidation service that may ultimately make matters much worse for you?

Debt Consolidation Companies Are NOT Law Firms

While in conversation with a representative from a debt consolidation company, you may get the impression that the debt consolidation company’s services are similar to a law firm’s services.

In fact, they are NOT.

Normally, debt consolidation companies do not have licensed lawyers on staff. Some may have one lawyer (as an example) so they can give off the appearance that the company is a legal service provider, but fundamentally, these organizations are never run by attorneys.

Rather, debt consolidation companies are most commonly owned and administered by marketing people.

The typical debt consolidation model involves collecting money from the business owner right away while explaining to the business owner that the funds collected will go towards payments to that business owner’s creditors.

However, quite often, there will not be a clear details as to what percentage of money paid will go to your creditors and what percentage will be paid to the debt consolidation company for its fees.

Moreover, even if payments are delivered by the debt consolidation company to your creditors, most likely, these payments will be sent in the absence of a formal written settlement agreement.

What does it mean to send payments to creditors without having reached a formal written settlement agreement?

At best, it means zero discount on settlement, with you paying back the full amount owed (as alleged by the creditor).

Often, it means you are making payments but are not receiving a balance reduction credit for the amounts you pay.

Payments made to a creditor without a written settlement agreement could very well be lost money.

What About a Lawsuit?

A judge's gavel sits atop a tack of hundred dollar bills to symbolize a debt lawsuit.

While you may be one of the fortunate or lucky ones who chooses the help of a debt consolidation company and never gets sued by a creditor, that is NOT the standard.

It is much more likely that one or more of your creditors will eventually file suit even if they are receiving temporary payments from the debt consolidation company.

Now, you face a greater danger. Who is going to defend the lawsuit for you?

The debt consolidation company generally will NOT have a licensed attorney on staff, and therefore, if you are sued, one of two things will occur:

  1. The debt consolidation people will explain that they don’t handle lawsuits at all (and good luck there) or,
  2. They will explain that they are going to hire a lawyer for you.

If they do hire a lawyer for you to file a legal pleading response in your lawsuit, the typical pattern is as follows.

They will hire a low-cost attorney and pay as little as $250.00 or $500.00 for that lawyer to file what is called a Simple or General Answer.

Essentially, that means that you will get the least possible legal effort in defense of your merchant cash advance lawsuit. That will most likely result in a very rapid judgment being entered against your company and you personally.

Avoid Low-Cost or Low-Budget Legal Services — Good Lawyers Do Not Work Cheap

In contemplating how to best deal with your business debt issue(s), you might consider hiring a low-cost lawyer or a low-cost law firm.

Possibly, a lawyer may offer that they will only charge you $500.00 to $750.00 to file a pleading response in your business debt lawsuit.

As the saying goes, you get what you pay for.

In exchange for a very low-cost legal fee, all that a lawyer is going to file for you in defense of your lawsuit is a simple Answer or Answer and Affirmative Defenses.

That is all you are going to get for that money.

Whether the lawsuit is filed in Utah, New York, Texas, Florida, or Virginia, as prime examples, if all you’re getting is a simple or general Answer, then all you are going to secure as temporary protection is approximately three (3) or four (4) months of safety time before your lawsuit results in a judgment against your company and you, personally.

The lesser the defensive pleadings, the lesser the time before an eventual judgment. And, once a judgment is entered by the court, the balance owed on the judgment debt will be much higher than the delinquent balance was just 3-4 months earlier.

Now, equate the 3-4 months until judgment scenario with the scenario of a lawsuit being defended much more aggressively (as needed) by an experienced merchant cash advance attorney.

That could result in a safety time of 12-18 months or even more.

That is a great deal more time for your business to recover and much stronger leverage for our lawyers to negotiate the best possible settlement arrangements for you.

Therefore, while you may be able to hire an attorney for an inexpensive dollar amount to file a simple pleading response in your commercial debt lawsuit, you are likely only buying yourself 3-4 months of time before you are slapped with a judgment and a debt balance that is 15-30% greater than what it was when you first went late on your payments.

The Business Debt Law Group Difference

Scales of justice on a white background.

We here at the Business Debt Law Group are different because our core partners have been practicing law since as early as 1997.

Anthony Rumore, Esq., established the original law firm in 2001, and our core partnership possesses more than 65 years of combined professional experience in the debtor/creditor and business representation legal industry.

Our background includes commercial debt defense, commercial business transactions, commercial and residential real estate transactions, mortgage foreclosures, consumer bankruptcies, and overall business enterprise representation.

We are a boutique law firm that fights and negotiates for our clients with creditors of all types, large and small, all over the United States.

The Comprehensive Approach to Commercial Debt Problems

What further separates our law firm from our low-cost or -budget law firm competitors is that we employ a comprehensive approach to our client’s debt matters.

Our law firm shall aggressively defend lawsuits filed by your creditors by doing much more than filing a simple or general answer.

For example, preliminary motions may very likely be filed, such as Motions to Dismiss with corresponding legal memoranda in support. We are likely to engage in discovery during the pendency of the lawsuit. We may file multiple opposition pleadings at multiple stages of the case.

All the while, we are defending your lawsuit aggressively and maximizing your safety time. Simultaneously, we shall be negotiating with creditors in good faith to secure discounted and affordable formal settlement arrangements.

Strong litigation tactics allow for greater time for your business to recover, strengthen the defensive position in your legal action, and provide greater leverage in settlement negotiations.

Additionally, what you will get with our law firm is a comprehensive analysis and legal advice regarding your overall business structure and personal liability exposure.

In other words, we are going to examine your business setup, your personal financial circumstances, all your debts, and your financial relationships.

With that information, we will provide you with very valuable asset protection, corporate structuring, and liability insulation legal advice. The Business Debt Law Group is a business ownership and commercial debtor-focused law firm. We specialize in your area of needs.

Whether a creditor may bring a lawsuit against you and your organization in your home state or sue in New York (most common) or maybe Utah, Maryland, Virginia, Texas, Florida, or elsewhere, we will defend that legal action and protect you and your business from judgment and liability exposure.

Initial consultations with our law firm are always free. If you have questions regarding your particular set of circumstances, Anthony Rumore or a member of his team would be very pleased to answer them for you.

Please don’t hesitate to give us a call or contact us for a consultation.

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