Debt Settlement New Laws - How New Laws Make Debt Settlement A Less Risky Option

Online, October 26, 2010 (Newswire.com) - Getting out of debt via a debt settlement process just got a whole lot easier for consumers and small businesses. New regulations for the debt relief industry go into effect today and effectively ban debt settlement companies from collecting upfront fees for their services. Now, consumers won't have to pay a dime until their debts are actually settled.

These new laws make debt settlement , also known as debt negotiation, a much more legitimate and far less risky option for consumers seeking debt relief. They can now enter into one of these programs knowing that they will not be left with a huge bill if their debts don't successfully settle for an agreeable percentage.

The average debt settlement is negotiated for around 50% of the actual balance. Consumers who are experiencing a legitimate financial hardship and struggling to pay their bills can settle their accounts for less and avoid bankruptcy. The problem before these new laws were passed was that consumers had to pay large upfront fees to these debt settlement companies with no guarantee that their debts would settle. This is not the case anymore and debt settlement has become a far less risky option for debt relief.

So why would creditors agree to these debt settlement deals in the first place? The answer is pretty simple. They do not want you to declare bankruptcy. Creditors of unsecured debt such as credit card companies know that if their customers were to file bankruptcy they would likely receive little to none of their money back. Knowing this they are willing to negotiate a lower payment if they believe the consumer is a legitimate candidate for bankruptcy. 50% of their money back is better than nothing.

The easiest way to convince creditors you are a legitimate candidate for bankruptcy is to go delinquent on your payments. This is a tough decision but absolutely necessary if you want to receive a successful debt settlement deal. Creditors simply will not negotiate with you if you are current on your payments. They're more than happy to collect interest from you for the rest of your life.

In order to qualify for a debt settlement consumers must have at least $10k in unsecured debt and be experiencing a legitimate financial hardship. This option is considered an alternative to filing bankruptcy. It will still have a negative impact on your credit score but not nearly as bad as filing bankruptcy. It is very important however that consumers know how to locate legitimate debt relief services.

The best way to locate legitimate debt settlement companies is through a Free Debt Relief Network . They are the watchdog of the debt relief industry and only recommend the top performing companies that have a proven track record of negotiating successful debt settlement deals. The top debt relief networks will have several debt relief specialist that can go over all your options for free and point you in the right direction.

Check out the following link to speak with a debt relief specialist and determine what debt relief tactic makes the most financial sense for your situation.

Free Debt Relief Advice