Bankruptcy Vs. Debt Settlement - How New Debt Relief Laws Make Debt Settlement Less Risky For Consumers
Making debt settlement a performance based industry has taken much of the inherent risk off of the back of the consumer and transferred it to the debt relief company. With these new laws, if companies don't perform consumers won't have to pay a dime.
Online, September 8, 2010 (Newswire.com) - In a move expected to lower bankruptcy filings the Federal Trade Commission enacted new regulations regarding debt relief. Most notable is a ban on the practice of collecting up-front fees by debt relief companies. Debt settlement companies must now show actual results in order to get paid. These laws are expected to put all the shady companies out of business however the legitimate services embrace this legislation.
Making debt settlement a performance based industry has taken much of the inherent risk off of the back of the consumer and transferred it to the debt relief company. If the debt settlement company doesn't reach a successful settlement then the consumer shouldn't have to pay a dime. Sounds fair enough.
This legislation is expected to put all of the shady debt relief services out of business. The legitimate debt settlement companies however embrace this legislation. Such a bold move by the FTC has cleaned up the industry creating an environment where only the strongest (i.e. legitimate and properly functioning) businesses can survive. Since creditors and card issuers receive nothing in a bankruptcy filing they are eager to work with genuine debt settlement companies to collect at least some of their money back.
50% of the balance was the average settlement in 2009. Most debtors find that working with debt settlement companies allows them to alleviate the stress and financial pain while not resorting to the damaging effects of a bankruptcy. Bankruptcy will ruin a debtors credit score for 7 years at the minimum. While debt settlement will negatively affect credit scores, it is not nearly as bad as filing bankruptcy.
With these new laws, consumers with over $10,000 in unsecured debt who are facing financial hardship now have very real and legitimate option for achieving debt relief. Credit card companies and other creditors of unsecured debt are worried about the rising delinquency rates and are having no choice but to agree to debt settlement deals.
The easiest way to locate legitimate debt settlement companies is to use a Free Debt Relief Network . These networks will ensure that the debt settlement company you are provided is legitimate and is a respected member of all the regulatory commissions such as The Association Of Settlement Companies and the BBB. Most free debt relief networks will provide a free debt consultation to help the consumer determine what debt relief option is most appropriate. There is no magic bullet to get out of debt however debt settlement can a good option for consumers who are experiencing financial hardship and have at least $10k in unsecured debts.
To locate legitimate debt settlement companies through a free debt relief network check out the following link:
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Tags: bankruptcy, credit card debt, Credit Card Debt Relief Act, credit counseling, debt relief, debt settlement, debt settlement companies
