The New Year brings about new hopes for getting on solid financial footing.

For those deeply in debt, with interest rates so high that putting a dent in the principal is nearly impossible, debt settlement seems like the only hope.

Debt relief agencies advertise heavily on television, radio and the Internet to solicit debt settlement cases, but their services fall short. The agencies often aren’t staffed by attorneys, so they lack expertise and experience in court if the debtor were to be sued by their creditor or a third-party debt collector.

Their track record and trust have also come under fire. To settle or reduce debt, agencies require monthly payments and have been known to disappear with the money.

Hiring an attorney for debt settlement can result in a more successful outcome.

"You know we’re regulated by the Bar," says John Mastriani, P.A., and President of Houston-based Mastriani Law Firm. "And we know how to handicap a (creditor’s) case."

Mastriani explains that attorneys know what type of evidence a judge will allow in court, how difficult it is to win or lose in a particular court and how the law applies to facts in a case. Outside of court, attorneys are better equipped to work with a creditor or a collector, having access to people with authority within those organizations.

Additionally, Mastriani’s law firm doesn’t collect monthly payments for settlement cases. Rather, he bills a fee, and clients are responsible for saving money that would have been spent on minimum payments for either a lump-sum debt settlement or a payout plan. The money remains in the client’s control.

"We try to negotiate a way to pay, as well as getting rid of the interest," says Mastriani. "I don’t think I’ve ever had a case, and I've had thousands of them, where they've ever paid interest. So we usually get a fixed amount of principal and settle."

Consider your credit

Getting off the hook for less than you owe sounds enticing, but if you ever want to qualify for a mortgage, a car loan or any type of credit line, think twice.

"Debt reduction kills credit at all costs," says Mastriani.

If you can get out of debt another way, whether it’s taking on a second job, getting a roommate and cutting expenses to pay off debt, that’s the surest way to preserve your credit score. Debt forgiveness is for people truly between a rock and a hard place.

Debtors with high debt-to-income ratios who opt to erase their debt are in a position where they can’t borrow more, anyway. A drop in their credit score wouldn’t drastically change their borrowing power, as the bank wouldn’t lend them more whether they are over-leveraged or have bad credit.

Think of your tax bill

The IRS treats forgiven debt as taxable income, so it’s conceivable that you’d owe Uncle Sam for your creditor’s write-off.

However, if negotiated properly and characterized correctly, an attorney could prevent you from owing a big tax bill. When dealing with the IRS, an attorney would put a case in its context. For example, if the creditor or collector were in violation of fair debt collection practices -- calling too late at night, misrepresenting the amount, not verifying the debt, or breaching the statute of limitations – the case could be closed as a set off rather than a settlement.

The insolvency clause in the IRS code also waives taxes on forgiven debt when the debtor is still in debt after the settlement.

Don’t do a DIY debt case

Some debts, especially when they’ve been sold from the original creditor to third-party collectors, can’t be proven with paperwork. Yet collectors can win in court without proper evidence simply because the debtor didn’t have the right representation.

"Show up in court by yourself, and you’ll get trapped," says Mastriani. "You don’t know how to keep yourself from talking, and they'll prove their case without documents."

Mastriani explains that a lot of individuals lose trying to defend themselves, and his firm wins a lot of cases by excluding the evidence. Even if a collector has documents, they may not be enough to prove the whole debt. Debt collection violations can also be used offensively to help get a debt reduction.

Lawyers can take on these cases inexpensively due to the high volume of them they receive -- the economies of scale work -- and their familiarity with this aspect of the law.

At the end of the day, though, attorneys work with most of their debt settlement clients by sending out letters and disputing debt with the creditors. They try to get a reasonable settlement while buying their clients time to set aside a nest egg to pay the settlement.

Mastriani recommends hiring a consumer protection lawyer to map out a strategy to get out of debt.