Home > Research Legal Advice > Debt Collection > A lawyer wants $5000 to try & settle a $350,000 debt. That seems high, ...
Asked 10 months ago - Los Angeles, CA
FlagI have a $348,000 judgement against me in Texas that is being submitted to CA. I spoke with a highly rated bankruptcy attorney who said he can try and settle with the company. It will cost $5000. If it doesn't work, he will charge another $1500 to try Chapter 13 and if that doesn't work, another $5000 for chapter 7, which may not work either. Should I try to settle the debt myself or . . . I don't want to mess this up. The lawyer said they can take and sell my house to settle the judgement.
There is always the possibility that you could settle the $350,000 debt yourself, but the difference with using the highly rated bankruptcy attorney is that your anticipated argument that you really are on the verge of filing for bankruptcy becomes much stronger when those words come from the mouth of the bankruptcy attorney himself or herself.
If you don't settle the debt, the Texas judgment, once domesticated here in California, becomes immediately enforceable.
My single concern here is that Chapter 13's normally cost quite a bit more than Chapter 7's, since the attorney has a LOT more work to do. Also, the attorney should have a VERY good idea of whether or not you will receive a discharge of this debt in 13 or 7, based upon the facts. Where was this attorney "highly rated?" By whom? While you are absolutely able to try to settle yourself, sometimes an attorney can achieve more by simply being a third party.
I would like to hear more facts before offering much more of an opinion here. With more information we all would be able to provide more detailed feedback.
Mr. Ridley practices bankruptcy law throughout Southern California, with offices in Ventura and Los Angeles Counties. He is also licensed to handle bankruptcy matters throughout the California Central District: Los Angeles, Ventura and Santa Barbara Counties. His phone number is (805) 244-5291, and his email address is ridley.eric@gmail.com . His website for more estate, bankruptcy and business information is www.ridleylawoffices.com .
Paying $5000 to settle a $348,000.00 judgment seems like a good idea. However, I would seek the advice of yet another attorney would take the time and determine if and whether you can file for bankruptcy 7 or 13 and quote you an exact amount for their services. Furthermore, having a bankruptcy attorney handling the settlement for you is much better because the creditor would feel that they have much to gain from settling and a lot to loss in its absence as judgments may be dischargeable in a bankruptcy.
If he can settle the debt for $5k, it is a great idea. Like most business decisions, it is hard to tell until it is all said and done. I don't think it is too high. We usually charge about 5-10%, so the 5k is on the low side, but we usually have people with more than just one debt. Other places charge 33% of what they save you, this would also be well over the proposed $5k.
Get a second, and a third, opinion. Pay each lawyer for his/her time for a one hour consultation. A "free consultation" is usually a sales pitch for whatever type of services the lawyer wants to sell. As for as losing your home, there is an automatic homestead exemption, of at least $75,000. In order to sell your home, the creditor needs to get an appraisal and go to court. Then, the creditor pays you the amount of your homestead exemption before proceeding to sale..
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