Credit Debt Settlement Act 2010 - How New Laws Help Consumers Settle Bad Credit Debt

Online, December 20, 2010 (Newswire.com) - The Credit Debt Settlement Act 2010 was recently passed by the federal government. These laws target debt relief companies and ban debt settlement companies from collecting upfront fees. This makes the process a much more advantageous option for consumers seeking debt relief.

Only consumers that are experiencing a legitimate financial hardship should consider getting a debt settlement. The ideal candidates will be struggling to meet their minimum payments on their credit card bills and other unsecured debts. Just because you want to eliminate 40-60% of your unsecured debt, does not mean that you will qualify for a debt settlement program . You must have at least $10,000 in unsecured debt and be able to prove that you are experiencing a financial hardship.

Debt settlement became popular after the new bankruptcy laws were passed in 2005. These laws made bankruptcy much more difficult to qualify for and much less advantageous. As a result many consumer entered into debt relief programs. The problem for the last 5 years however has been that there has been no regulation of these companies. As a result many shady services went into business and took advantage of desperate consumers. This is not possible anymore and all of the shady services have been put out of business. Only the legitimate debt settlement services are left.

The Credit Debt Settlement Act 2010 make it much less risky for consumers to negotiate and settle their unsecured debts for less. Now when you enter such a program you will not be responsible to pay a single penny until your debts are settled for an acceptable percentage. The most common minimum performance standard that debt relief companies are now using is 35%. This means that if they can't completely eliminate at least 35% of your balance, then you will not have to pay them for their efforts.

Making these companies actually earn their fees makes it a much more legitimate industry. All the shady companies have been put out of business. Only the companies with a proven track record of negotiating successful settlement deals will be able to stay in business. They will have enough confidence to collect the fee on the back end when they actually reach a successful settlement deal.

Getting out of debt through a debt settlement process is currently very popular but you need to know where to locate the best performing programs in order to get the best deals. To compare debt settlement companies it would be wise to visit a free debt relief network which will locate the best performing companies in your area for free.

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