In light of the proposed bankruptcy legislation that would make credit counseling a mandatory prerequisite to a bankruptcy filing, a few of my solo colleagues have considered offering debt reduction services as part of their practice. For those considering this option, be sure to read David Giacalone’s post about what can go wrong with debt reduction services. David writes about an attorney now under prosecution for fraudulent debt reduction services as well as the FTC’s recent crackdown on three debt reduction businesses engaged in deceptive practices.
Unlike David, I believe that debt reduction (if done correctly) does require legal skills – lawyers can play a valuable role in using negotiating skills to bargain down debts with creditors or possibly come up with ways to challenge creditors’ claims. I just hope that attorneys who enter the debt reduction business are motivated as much by a desire to help financially vulnerable individuals who have no choice but to seek credit counseling as they are to capitalize on a potentially new practice area that may soon be ripe for harvest.