Debt Relief Solutions - New Federal Laws On Consumer Debt Relief
The Federal economy has seen a steady increase in the demand for debt relief solutions
. This has happened after the recession when thousands of Americans lost their jobs. As they became unemployed, their income sources became choked and they started to fail on their debt repayment. This made them defaulters and they started getting collection calls from the lenders. To avoid these collection calls, they filed for bankruptcy and later faced enhanced financial troubles because of the loss of credit score and credibility. They failed to get any further credit from the lenders and this will continue to happen for the following 7-10 years. The sufferings will continue even after that because they will become sub-prime consumers after that period and they will be able to get further loans from the creditors but, the rate of interest that they need to pay will be much higher than the usual market rates of interest.
It is because of this reason; they looked for alternative debt relief solutions. The option that came to their rescue is the method of debt settlement. However, the settlement industry earned a bad reputation because of the fraud and shady companies which operated in the market. As a usual rule of the settlement industry, the companies take upfront fees from the consumers and then they negotiate with the creditors for cutting down the consumer debt. This had an element of risk for the consumers because in case the negotiation failed, the consumers will lose the money that they pay to the settlement companies as upfront fees. The shady companies took advantage of this situation and they collected advance fees from the consumers and later informed them that the negotiation failed. It is because of this reason that people started losing faith on the settlement process of debt elimination.
To reform the settlement industry, a new legislation was passed by the Federal Trade Commission on July 29th which will be enforced on October 27th. With this new legislation in place, the settlement companies will not be allowed to collect advance fees from the consumers. With this ban on upfront fee collection, the shady companies will be thrown out of the market and only the reputed companies with strong financial background will survive. The risk element for the consumers will be eliminated and the level of competition will be reduced leading to better service quality!
Debt settlement is the best alternative to filing bankruptcy and the new regulations have made the process a much better deal for consumers.
Debt Relief Solutions - New Federal Laws On Consumer Debt Relief