Delinquent Debt

Legal Strategies to Overcome Delinquent Debt

Legal Strategies to Overcome Delinquent Debt. Americans love credit cards. They’re convenient, protect our bank account when making transactions, and offer valuable reward programs. But, unfortunately, because of these benefits and because we live in a consumerist society, Americans are overburdened with debt.

Sure, sometimes delinquent debt is a result of overspending or poor money management. More often, though, people fall behind on debt because life shows up. Unexpected illness brings medical expenses, job loss leads to a drop in income, loved ones pass away. These unexpected expenses are what lead to the majority of unmanageable debt.

For those struggling with delinquent debt, several legal strategies can help you get back on track. We’ll review the pros and cons of each approach and the likely impact on your credit score.

Delinquent Debt
Legal Strategies to Overcome Delinquent Debt


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 Attorney Assisted Debt Negotiation

When you have multiple debts that have fallen behind, you might want to consider hiring a debt settlement attorney to negotiate delinquent debts. Legal representation to negotiate your debt is beneficial when you have multiple accounts and would prefer to avoid bankruptcy.

A qualified attorney will be able to look at all aspects of your situation. They will identify risks that you face based on your state and factors like your income and assets.


When debts fall behind, creditors can file a lawsuit and attempt to garnish wages, place a lien against a home, and more. Among the most significant benefits of hiring an attorney is that they will help you prioritize your accounts and offer legal advice if things get scary.

Plus, it’s always fun to be able to refer a bullying collector to your attorney.


Finding a reliable debt relief attorney can be difficult. Most attorneys will focus on bankruptcy because it requires a bit less hands-on attorney involvement. However, the negotiation of debt is anything but hands-off. It is a very hands-on process, especially when you have multiple accounts.

The debt settlement attorneys help people across the country negotiate their debts and correct inaccuracies on their credit report, among other debt and credit-related legal services.

Effect on Credit

When you are dealing with delinquent debt, your credit has already taken a significant hit. Unfortunately, negotiating your debt does not change the way your accounts appear on your credit report, even with the help of an attorney. It is not until shortly after settlement payment that it will indicate anything other than being delinquent. At that point, it should appear as being settled in full with a $0 balance. While this is technically still considered a negative remark, it is better than having an unpaid account on your report.

Validation of the Debt

If you have a debt that has fallen behind, you may be able to request the creditor provide validation of the debt. Validation may be appropriate if you don’t believe you owe the debt or if you have reason to believe the amount, they claim you owe is inaccurate.

While you can ask a collection agency to validate a debt on your own, it’s best to get the assistance of an attorney. They will help you understand your right to request validation of the debt and, perhaps more importantly, offer guidance if the collection agency cannot provide proof of the debt.


Requesting validation of debt is an opportunity to end the collection of invalid debt. When a collector cannot validate an account, they should stop calling and reporting the remarks to the credit bureaus as long as you request the validation within the first 30 days of the initial collection letter.


When you request debt validation, you ask the collector to prove that the debt is authentic and valid. You are effectively:

A) letting them know that you exist and are aware of the debt,

B) telling them you are unhappy that the debt exists, and you want it gone, and 

C) forcing them to gather all the documentation needed to back up a lawsuit against you. 

Only take this approach if you genuinely believe that something about the account is incorrect.

Effect on Credit

Suppose you attempt to request validation on a delinquent account, and they cannot provide needed proof. In that case, the remark may be removed from your credit report. However, there will be no new effect if validated, as the delinquent is likely to be present on your credit report already.


When you’ve fallen behind on your debts and don’t think that a debt settlement attorney can help, filing for bankruptcy is another way to overcome delinquent debt. It works well for those who cannot repay their debts and see no change on the horizon. 

There are two types of bankruptcy for consumers, Chapter 7, and Chapter 13. Let’s take a quick look at both!

 Chapter 7

Chapter 7 is what most people think of when they are considering bankruptcy. It is appropriate for those who can’t repay their total debts and have no other legal options available to them.

In a Chapter 7 bankruptcy, you get a clean slate. You pay your filing fee and attorney’s fee, complete a pre-bankruptcy financial counseling session. Once your filing is complete, you move on with your debt-free life.

Chapter 13

Unlike Chapter 7, Chapter 13 is not a clean sweep. It is more of a restructuring of your obligations. If the court-appointed trustee feels that your financial situation will allow you to repay a portion of your debt, they may require that you do so. They may require that you repay a certain percentage of the amount owed over some time. It is very similar to the settlement process, except the creditors must agree, and you’ll know the amount you must repay from the beginning.

Once approved for Chapter 13, you will pay the trustee each month. Then, after completing filing and payment plans (just like Chapter 7), you can move on with your life.


Both forms of consumer bankruptcy are incredibly effective. Once your attorney has informed your creditors that you are filing, they must cease collection activity under federal law. There is no question or ambiguity. In addition, once an account is discharged via bankruptcy, there is no further obligation to the creditor.


Bankruptcy has a significant impact on credit and warranted or not, there is a stigma associated with it, too. Bankruptcy can be disproportionally unaffordable. It may only make sense for those with higher amounts of debt. Also, many applications will ask if an individual has ever filed for bankruptcy. They do not usually care to know the circumstances that led to the default. Indicating that you’ve filed for bankruptcy can be an immediate dealbreaker for a potential employer or landlord. Also, after a Bankruptcy, you can only file again after a specific number of years have passed, so if your financial situation is likely to get worse, you may want to wait before filing. 

Effect On Credit

Bankruptcy will have a significant effect on your credit score. It will usually appear on your credit report for ten years. Even if your score recovers, some applications will be denied simply due to the bankruptcy having taken place. However, if you have been struggling with delinquent debts, bankruptcy could be the right approach to getting back on track!

No matter what legal strategy you choose to help overcome delinquent debt, it is crucial to take action! Debt takes a very long time to go away unless you take appropriate action. Evaluate all your options and, with a bit of time and dedication, you can get out of debt.

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Josh Richner
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Josh Richner is a personal finance writer, father, and travel enthusiast. He has been helping people get out of debt and improve their credit since 2008. His accomplishments include founding a Christian debt relief company, negotiating over $7M of debt for clients, and leading a stellar team of negotiators for a multistate consumer rights law firm. Josh believes financial education will pay dividends and is shouting from the rooftop to help bring financial literacy mainstream. Connect with Josh for writing at

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