How Much Does a Debt Settlement Lawyer Cost?


How much a debt settlement lawyer costs will vary depending on where you live, how much you owe, the type of debt (or debts) you have, and the overall complexity of the case. Attorney fees are also dependent on whether you’re charged an hourly fee, a flat fee, or a percentage of your debt.

If you find yourself struggling to manage your debts — such as credit card debt, medical bills, student loans, payday loans, or child support payments — you might be wondering what the best course of action is to get a handle on your repayment obligations. Maybe you’re even being pursued by debt collectors and think it might be time for some professional assistance.

Today we’re going to discuss debt negotiation attorneys, how much attorneys’ fees cost, what exactly they do, and how they can help reduce your debt through a negotiation process. We’ll also take a look at some alternatives to a debt settlement lawyer.

How much does a debt settlement lawyer cost?

Attorney fees for debt relief are tied to how much work they do and the particular services they perform for a client. Those factors include, but are not limited to:

  • The type of debt you’re in (e.g., unsecured debt like credit cards versus secured debt, like a car loan)
  • The total amount of your debt
  • The scope of the work involved (such as how many creditors they must negotiate with)
  • How lengthy or difficult the negotiation process is

Each debt settlement case is unique, so how much you must pay for legal services can vary quite a bit. Typically, there are four main fee structures.

When the debt amount is large, and your creditor or collector is threatening to take legal action or has already got a judgment against you, it’s best to take the help of a lawyer or a law firm.” — Lyle Solomon, principal attorney at Oak View Law Group

1. Hourly fee

“For debt settlement attorneys who charge an hourly rate, you’ll probably pay between $150 to $350 per hour,” says Lyle Solomon, principal attorney at Oak View Law Group, which has helped more than 6,000 clients become debt-free through its debt-reduction solutions.

2. Flat fee

Some debt settlement lawyers charge a flat fee for their services, which Solomon states is somewhere between $500 to $5,000. Again, this will depend on the scope of work involved.

For example, if it’s relatively minor credit card debt, you’d be at the lower end of the scale. For more complex cases, like if you’ve been sent to debt collection for multiple debts or a judgement has been made against you, you can expect to pay significantly more.

3. A percentage of the amount you owe

Another possible fee structure is to charge consumers based on the total amount of debt they’re trying to settle. This fee is typically between 15% to 25%, says Solomon.

4. A percentage of the amount a settlement saves you

Similarly, a debt settlement attorney may charge a fee based on a percentage of how much a settlement proposal saves you, which is also usually between 15% to 25%. A good attorney should always have your best interest at heart, but this type of fee structure can provide more incentive for the attorney to get the best settlement terms possible.

What do debt settlement attorneys do?

A law firm that specializes in debt settlement will analyze your situation, provide financial advice, go over your options to achieve debt relief, explain the fee structures to you, and assist you with the entire negotiation process. Some of the ways a debt settlement attorney can help you include:

  • Consolidating your debt
  • Lowering your total debt
  • Lowering your interest rates
  • Helping you put together a payment plan
  • Negotiating with creditors on your behalf
  • Handling debt collector phone calls

Another important part of the process is for consumers to fully understand the legal risk and other risks involved when you have debt problems, says Josh Richner, Marketing Director for National Legal Center, a consumer rights law firm with a significant portion of its practice focused on debt settlement.

“A debt settlement attorney should be identifying and discussing risk,” says Richner. “Whenever you cannot repay your debt, you face risk to your credit, wages, real estate, and more. A knowledgeable attorney can help you understand those risks, and others that come along with debt settlement.”

Pro Tip

A reputable debt settlement lawyer will usually offer a free initial consultation to go over your case. This is always a smart move because you can get an idea of the process before you make any financial commitment. You can also consult with multiple debt settlement attorneys to see whom you feel most comfortable with.

Other options to achieve debt relief

There are a few other options to consider when you’re in need of debt relief and are worried that you might not be able to manage the legal fees.

Consult with a consumer credit counseling service

Before incurring hefty attorney’s fees, it’s a good idea to first consult with a nonprofit consumer credit counseling service. For a minimal fee, these organizations, which are usually nonprofits, can assist consumers with a number of financial challenges, such as:

  • Advising you on managing your money and debts
  • Assisting with developing a budget
  • Helping you get a copy of your credit reports
  • Offering free educational materials and workshops (when available)
  • Helping you organize a debt-management plan to repay your debts

You may still need the services of an attorney after meeting a counselor, but they can help you put your financial situation in perspective and may be able to offer referrals as well. But before you reach out to a credit counseling service, make sure you find the right company for you.

Handling the negotiation process yourself

“Negotiating on your own is always better; if you save money on your debt, most of it’ll be yours to keep, except the amount you pay for taxes,” says Solomon.

However, trying to reduce your debts on your own can be tricky, and an attorney might be better able to assess creditors’ willingness to negotiate. Plus, there may be other circumstances to your situation that require legal advice.

For example, “When the debt amount is large, and your creditor or collector is threatening to take legal action or has already got a judgment against you, it’s best to take the help of a lawyer or a law firm,” Solomon advises.

Hire a debt settlement company

Debt settlement companies are another alternative to lawyers, although you may end up paying nearly as much as you would for an attorney,” says Richner. “[And] they may not have all the legal resources you need. But in less complicated situations, their services could be of value.”

“Debt settlement companies do serve a place and a purpose. Notably, they can assist in less complex situations, like when your debts total $10,000 or less or you only owe… one or two creditors. But for more complex cases, a reputable law firm can be the best option. A debt settlement company absolutely can help, but their services are limited, and they cannot offer legal advice.”

To compare the services debt settlement companies may offer, take a look at some of the companies below.

Is it worth it to hire a debt settlement attorney?

As mentioned, your unique financial circumstances will ultimately determine if a debt settlement attorney is the best solution for you, Richner stresses.

“[Most] importantly, you need to make sure you’re getting the best service for your particular situation. Generally speaking, you’ll pay similar fees to a debt settlement company or law firm. However, one has the ability to offer direct legal advice and guidance on your situation while the other is legally prevented from doing so, or else they’d be violating laws about non-attorneys giving legal advice.”

In the end, exploring your options, doing your research, and getting multiple quotes on the costs of debt relief will help you pick the best solutions for your debt settlement needs.

Pro Tip

Whether you’re looking into a debt settlement attorney or a debt settlement company, always ask if they offer a free consultation. Going forward, this can allow you to explore more options and gather additional information to make the most informed choice about your financial situation.


Are bankruptcy attorneys the same as debt settlement lawyers?

Bankruptcy attorneys and debt settlement attorneys are similar. However, a debt settlement attorney will focus mainly on reducing your debts, navigating the negotiation process, and supplying you with legal information and tax advice. They’ll also help you make payment arrangements.

A bankruptcy law firm, on the other hand, can get you out of debt altogether, but not without consequences. For example, bankruptcy will stay on your credit report for seven to 10 years, which makes it very difficult to obtain any kind of new credit for years to come. A bankruptcy lawyer is best if you have a lot of outstanding debt and still can’t afford to make payments even after reaching a settlement agreement.

Is it better to settle or pay in full?

While it may not always be possible, if you can, the best strategy is always to settle your debts in full. While settling will reduce the amount you have to repay and eliminates future interest, you’ll probably be on the hook for income taxes on what you saved.

Plus, creditors will usually report that the account was settled, but not paid in full, making you appear as a higher credit risk to future lenders.

Should I ignore debt collectors if I can’t afford to pay?

Even if your car loan, student loans, or other debts have been sent to debt collections, you’re not doing yourself any favors by refusing to answer the phone when collection agencies call. By ignoring creditors, you open yourself up to lawsuits, wage garnishment, and seizure of your assets. It’s always better to attempt to reach agreements of some kind to try and salvage your credit score.

Key Takeaways

  • A debt settlement attorney may cost a consumer between $150 to $350 an hour. Alternatively, they may charge a flat fee, a percentage of the amount owed, or a percentage of what the settlement saves you.
  • To reduce the total amount owed, debt settlement lawyers typically help consumers who have unsecured debt find debt relief by negotiating with creditors and dealing with debt collectors.
  • Debt negotiation tactics might result in a reduction of the amount owed, lower interest rates, and coming up with a manageable payment plan.
  • Debt settlement companies are an alternative means to debt relief but may cost you just as much money. They may not be able to help with certain situations like dealing with the court system.
View Article Sources
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