5 Differences Between an MCA Defense Attorney and a Debt Settlement Company

A debt settlement company is a for-profit company that negotiates with creditors on behalf of the company that owes money. If you have accumulated debts, you may look to one to help negotiate down the amount you owe.

Some debt settlement companies purport to help you resolve all your debts at one time. These are not law firms, but they negotiate the amounts owed on behalf of their clients. Many claim to work on a contingency basis. Unfortunately, you will often pay a retainer, with which they will not work until you have paid them. This time lag compounds your debt as late fees accrue, all while they provide no assistance on your behalf.

Most settlement companies are not based in your area, or even your state, which can limit the ability to leverage negotiations against your creditors. Because they cannot litigate or represent you in a courtroom, they do not offer the same services a commercial defense lawyer can.

Representation

While debt settlement companies provide some very real and helpful services to help negotiate down debt, an attorney is, by law, required to represent you in the states in which you do business. In the case where arbitration is required, a settlement company can only negotiate a resolution or reduced settlement. The creditor could retain an attorney and initiate a court action - most notably when the loan is secured - and a court can potentially rule against you, often including fees for your default. Most debt settlement companies can't initiate a court action, should it become necessary. And if you need to bring suit against creditors who have unfairly taken advantage of you, only an attorney can properly represent you.

Should a court order or demand repayment, an attorney would immediately petition the court to stay such actions, whereas a debt settlement company would simply advise you to negotiate with the creditor. Many settlement companies are limited to some level of negotiation, often accruing high interest rates and heavy penalties while negotiations take place. Arbitration proceedings will always require lawyers.

What to Watch for in Law Firms Too

Some defense attorneys who advertise relief for merchant cash advances provide boilerplate and canned agreements. In many cases, you may be advised to immediately file for bankruptcy or arbitration without even being consulted about the circumstances that led you into financial trouble. This compounds problems because of delays in communication or unnecessary defaults. Some attorneys don't take the time to learn your story, making promises that are impractical or incorrect - selling promises they cannot fulfill. While you should never completely take the word of any professional, you should do your homework.

The Consequences of Getting It Wrong

If you owe merchants, your assets and financial future may be threatened. You can hire a debt settlement company to negotiate on your behalf, or reach out to a lawyer to fight unfair creditors. Both may resolve your issues or place you at greater risk. Only a commercial debt attorney can advise you about potential threats such as having your assets frozen, or personal liability assessed in situations in which you were not a signatory of the debt. Although there are attorneys who can handle personal debts, a business debt is a specialized matter.