Credit Debt Relief Programs - Understanding How New Federal Laws Help You Settle Debt For Less

Credit Debt Relief Programs - Understanding How New Federal Laws Help You Settle Debt For Less

New debt settlement laws were recently passed by the Federal Trade Commission of the United States. These new federal laws provide much more protection for consumers and small businesses that enter into credit debt relief programs. It is now illegal for debt settlement companies to collect upfront fees for their services. They are not allowed to collect a fee until the negotiate a successful settlement deal and eliminate at least 35% of your overall balance.

These new federal laws go a long way in making debt settlement a legitimate option for consumers and small businesses. These credit debt relief programs must now actually live up to their promises in order to get paid. Therefore the underlying risk has been transferred from the consumer to the relief company. They don't get paid unless they negotiate and settle your debt for less.

Not all consumers will qualify for a debt settlement. You must be experiencing a legitimate financial hardship and have at least $10,000 in unsecured debt. This is seen as a alternative for those who are on the verge of bankruptcy. So if you are experiencing a financial hardship and and want to avoid filing bankruptcy, then it would be wise to consider a credit debt relief program.

When you file bankruptcy you are taking a big risk that your credit will be ruined for a long time. The average bankruptcy filing will affect one's credit score for at least 7 years after the filing is complete. Considering the average bankruptcy case takes 3 years to complete, you are running the risk of having your credit being adversely affected for up to 10 years on average.

Debt settlement is seen as a legitimate alternative to filing bankruptcy. If you have over $10,000 in unsecured debt and are experiencing a financial hardship then a debt settlement can make financial sense.

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