Credit Repair Attorneys
Credit repair is a big business. Even though about half of all Americans have a good to excellent FICO score, that portion of the population with a credit score below 650 is vulnerable to credit repair scams because they want their credit to improve badly enough to try anything.
Credit repair attorneys are lawyers whose main business is credit repair. Because they’re members of a bar association, people think they’re all operating above board. The reality is that there are just as many lawyers offering fraudulent credit repair as there are independent credit repair companies.
Some credit repair attorneys are doing good work for clients. The trick to hiring credit repair attorneys is weeding out the credit repair lawyers who are just trying to take advantage of your credit situation.
Credit Repair Lawyers
Here are ten questions to ask credit repair lawyers before you agree to do business with them:
- What specific credit repair services do you offer? You should find credit repair lawyers that offer a wide range of services, not just credit repair. Good credit repair lawyers will offer you budget counseling through a partner in credit counseling, as well as information on savings and debt management classes. Avoid credit repair lawyers that try to sell you a DMP or debt management plan as the only credit repair option before they do any work analyzing your specific financial needs.
- Do you offer educational information? Are educational materials available for free? You should avoid any credit repair lawyers that charge for basic information.
- Besides just helping me fix my immediate credit problem, can you help me develop a plan for avoiding future problems? Good credit repair lawyers and attorneys work closely with credit repair counselors to fix their client’s long term financial issues.
- What are your fees? You should know if your credit repair lawyers charge set-up fees, monthly fees, or any revolving fees at all. It is best to avoid using credit repair lawyers that don’t charge a specific price and offer it in writing.
- What happens if I can’t afford to pay your fees or make contributions? If a credit repair lawyer won’t help because you can’t afford to pay up-front, keep looking. Many credit repair attorneys have payment plans or other systems to help people who can’t pay right off the bat.
- Will I have a formal written agreement or contract with you? If you’re being asked to start a credit repair program with a lawyer before you read and sign a written contract, you could be in danger. Also, don’t sign any contracts without examining them first. Ask your credit repair lawyer to put all verbal promises in writing.
- Are you licensed to offer your services in my state?
- What are your qualifications? Ask your future credit repair lawyer if they are accredited and/or certified by an outside organization in your state. Find out the names of these organizations, and ask about any specific training your credit repair attorney has received.
- What assurance do I have that my personal information will be kept confidential? Your personal information should not be for sale or shared with anyone. That includes your address, phone number, and financial information. All of that information should be guaranteed secure.
- How are your employees compensated? If a credit repair lawyer is paid based on how many services you sign up for or for their client’s financial contributions, you might be in danger of getting scammed. This last question can be a big red flag for credit repair lawyers looking to take advantage of your credit situation.
Debt Settlement Attorneys
One of the more dangerous trends in credit repair these days are attorneys promising debt settlement at a low percent of what you currently owe. These offers can be dangerous because of the exorbitant fees charged by lawyers for this service and for the service’s impact on your future ability to take out lines of credit.
Debt settlement lawyers claim they’ll negotiate with creditors to drastically reduce the amount of your debt. It sounds promising because these lawyers offer to deal with the creditor and get them to accept a much smaller amount to settle the debt. I’ve heard offers of debt settlement as low as 70 percent off the original balance. I once owed $10,000 on a discover card, and got offers in the mail from debt settlement attorneys who claimed they could help me pay off the debt for just over $3,000, as long as I signed up for their revolving fee service and paid a one-time fee on top of that.
These lawyers are also dangerous because they instruct their clients to stop paying their monthly payments and send your payments to them instead. Often they claim that they’re holding your payments in a savings account until it is time to pay your creditors the reduced debt amount.
Unfortunately, most of these claims are false. Creditors have no obligation to deal with credit repay lawyers offering debt settlement, but they do have an obligation to report the fact that you stopped making regular payments.
Some people who have dealt with debt settlement attorneys have been sued by their creditors for the balance of their account. These people have found that their credit repair attorneys have not been saving their payments in any account, and they’re deeper in the hole than when they started.
The key to dealing with credit repair attorneys is asking the right questions, not signing any contracts or agreements until you read them, and checking into their credit repair business’ past and future. If something doesn’t feel right, move on down the road to the next attorney. There are plenty of legitimate credit repair attorneys doing business, no reason to sign on with the first lawyer you contact.