If you have unpaid debt and was handed to a lawyer, you might find yourself asking why your debt seems to have ballooned despite the small amount you have left to pay. This situation often arises from the accumulation of various costs, penalties, and interest charges that can quickly increase the overall amount you owe. Here are some reasons why your debt might be much higher after being handed over:

1. Legal Fees and Costs

Lawyers are entitled to charge fees for their services, which may include Attorney Fees, Collection Fees & Court Fees. If your case goes to court, there will be further costs involved, such as filing fees, service fees, and other related expenses which are added to your debt. All of these charges can add up quickly and significantly increase the amount you owe, even if the original debt was relatively small.

2. Interest and Penalties

Debt agreements often allow creditors to charge interest on overdue amounts making your debt appear much higher than it originally was.  Many creditors also impose late payment fees or penalties when payments are missed or delayed.

Once a lawyer gets involved, they may also charge additional interest or administrative fees related to the collection process, further inflating the total amount.

4. Default Judgment and Enforcement Action

If you don’t take action to pay when a lawyer gets involved, they may choose to take you to court to sue you and obtain judgment against your name. This means that the court can rule that you owe the debt, and it may order enforcement measures such as a Garnishee Order or follow execution steps that may result in your assets being sold to pay for the debts. Both these actions can result in additional costs, including further legal fees and administrative charges. The debt may grow significantly once these steps are taken.

5. Debt Collection Fees and charges

A lawyer will add their own set of costs for their work to recover debt from you which include collection commission, Sheriff costs, postage fees and also Attorney’s fees such as preparation of documents (drafting & filing), court appearances etc.  All of these costs can contribute to the escalation of the debt you owe. Sometimes, they can even exceed the original amount you borrowed.

By failing to engage with the lawyer early on, you may miss opportunities to negotiate a repayment plan or settle the debt for a lower amount. The longer the matter remains unresolved, the more likely it is that fees and charges will continue to mount, making the total amount you owe much higher.

Conclusion:

The higher your debt becomes, the more difficult it may be to negotiate or settle the debt. The longer the case drags on, the more likely it is that penalties, fees, and interest will continue to mount.

Communicate with the Creditors and Lawyers! If you’ve been handed over to a lawyer, don’t ignore the situation. Contact them to discuss repayment options or negotiate a settlement. In the long run, understanding the reasons behind your high debt can help you make informed decisions to reduce your financial burden and regain control over your finances.