New Laws For Debt Settlement - Why The Debt Settlement Process In Finally Legitimate

Online, August 23, 2010 (Newswire.com) - The FTC recently passed new laws regulating the debt settlement industry banning them from collecting upfront fees. Now consumers that enter into a debt settlement program will not have to pay a fee until the debt relief company actually settles the debt. Therefore the risk of entering such a program has been drastically shifted from the consumer to the debt settlement company.

With the new FTC laws, debt relief companies won't get paid unless they are able to settle the debt for an agreeable amount. This will undoubtedly increase the effectiveness of debt settlement. The debt negotiators will be much more motivated to reach an agreeable settlement as their fee is on the line now. Before these new FTC laws were passed, the debt negotiators were paid upfront and therefore had far less motivation.

This legislation is expected to push out all of the shady debt settlement companies that have been ripping consumers off for the past 5 years by collecting non-refundable fees and simply not performing. These companies will not be able to survive with this new legislation. The legitimate debt settlement companies that have actually been settling consumer's debt will have enough confidence to collect their fees on the back end.

The process of debt settlement does work when does correctly and by the right company. Credit card companies understand that if a consumer were to declare bankruptcy they would probably not receive any of their money back. Knowing this, and the fact that there are a lot of people on the verge of bankruptcy, they are more than willing to make a debt settlement deal. They'd rather have 50% of their money back than none at all.

Debt settlement companies grew significantly over the past few years as a result of stricter bankruptcy laws. Consumers that want to avoid bankruptcy and eliminate unsecured debt see debt settlement as a viable option. Debt settlement companies that have implemented the attorney based model provide consumers much more protection under the law than those that have not. Therefore, it is highly recommended that consumers considering debt settlement go through a company that is fully back by attorneys.

To locate legitimate debt settlement companies that will offer consumers the most protection under the law check out the following link:

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