Debt Settlement Laws – How New Laws Have Finally Made The Debt Settlement Process Legitimate

On July 28th 2010 new regulations were passed by the FTC which bans the practice

of debt settlement companies collecting large upfront fees with no performance guarantee. The days of these debt relief services taking consumers' fees without actually settling any debts are over. Now they will have to actually settle the debts to get paid. These new regulations have made the debt settlement industry much more legitimate and clearly a better alternative than filing bankruptcy.

The risk of entering into a debt settlement program has been shifted from the consumer to the debt relief company. New laws recently passed by the FTC have banned debt settlement companies from collecting upfront fees thereby making debt settlement a legitimate option for personal credit card debt relief. Consumers who are experiencing a legitimate financial hardship and want to avoid bankruptcy now have a legitimate option in debt settlement.

This new legislation is expected to put all the shady debt relief services out of business. Only those services that have legitimately been settling consumers' debts will be able to survive. The debt settlement process does work when done in the correct way and with the right company. The legitimate debt settlement companies will have enough confidence to collect their fees on the back end when they successfully settle the debts.

Credit card companies and other creditors of unsecured debt are willing to make deals. They understand that if a consumer were to declare bankruptcy they would likely receive nothing. Creditors of unsecured debt, such as credit card debt, are typically last in line to collect when a consumer files bankruptcy. Therefore, if a consumer is a legitimate candidate for bankruptcy, creditors are more than willing to negotiate and settle for less.

The average debt settlement in 2009 was negotiated for 50% of the balance. Approximately $1 billion in unsecured debt was settled in 2009 which resulted in $600 million being eliminated off the books of consumers and $400 million being collected for creditors.

Debt settlement is basically intended for consumers that are struggling financially and legitimately cannot afford to pay back their debts. Many people choose this option to avoid bankruptcy. Bankruptcy will typically affect credit scores much longer than a debt settlement process would. Therefore bankruptcy should always be the last option for debt relief.

There are also other debt relief options available such as credit counseling and debt consolidation. If you have over $10k in unsecured debt and are experiencing a legitimate financial hardship it would be wise to speak with a debt relief specialist that will go over all your options for free. Check out the following link for a free debt relief consultation:

Debt Settlement Laws How New Laws Have Finally Made The Debt Settlement Process Legitimate

By: Ansel Fraizer

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