Credit Card Debt Bankruptcy - How New Federal Laws Make Debt Settlement Better Than Bankruptcy

Online, November 3, 2010 (Newswire.com) - There are more Americans on the verge of credit card debt bankruptcy than ever before. Many of these consumers would simply file bankruptcy in the past however new federal laws make debt settlement more financially appealing than filing bankruptcy. Debt settlement which used to be a very risky option for debt relief is now a legitimate and affordable option thanks to new federal laws which ban the practice of collecting upfront fees.

In the past when consumers would enter into a debt settlement program they had to pay their fees upfront and there was no real gaurantee that their debts would actually settle. Many shady debt settlement companies took advantage of this and simply made a business out of collecting upfront fees without providing any real service. This is not possible any more.

Only the legitimate debt settlement companies will survive this legislation. The companies that have legitimately been settling consumer debt balance will have enough confidence to collect their fees on the back end when they reach a successful settlement deal. They don't get paid unless they perform. Sounds like a fair deal to me.

Credit card debt bankruptcy should be avoided at all cost. Bankruptcy will effect your credit score for at least 7 years after the filing. Considering the average bankruptcy process takes 3 years this means that your credit score will be negatively affected for 10 years on average. Debt settlement will still negatively affect your credit score but typically consumers are able to recover in about 3 years.

Credit card companies are willing to make deals. They know that if their clients were to file and get accepted for Ch. 7 bankruptcy they would likely receive little to none of their money back. Therefore if they believe you are a legitimate candidate for bankruptcy they are more than willing to settle for a lower amount to collect at least some of their money back. 50% of their money back is better than nothing.

If you have over $10,000 in unsecured credit card debt and are experiencing a legitimate financial hardship it would be wise to look into a debt settlement especially with the new FTC laws that just got passed. If your debts don't settle you don't pay a dime.

The best companies offer other debt relief products as well such as debt consolidation and credit counseling. They will provide a free consultation and help you determine what debt relief option makes the most financial sense for your situation. Check out the following link to locate legitimate debt settlement companies in your area.

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