Settle Credit Card Debt - How The Bad Economy Makes It Easier To Negotiate Credit Card Debt

Settle Credit Card Debt - How The Bad Economy Makes It Easier To Negotiate Credit Card Debt

Settling credit card debt has now become easy because of the fact that the condition of the economy is very weak. The meltdown of the economy because of the recession led to a situation of financial crisis of the consumers. The consumers lost jobs and they simply failed to repay the credit card debts that they have. Because of this poor condition, the consumers started filing for bankruptcy to get rid of their debts. This massive and sudden push in the number of bankruptcy filings resulted in greater disaster.

With every single instance of bankruptcy, the loss of the creditors continued to mount gradually and the loss went up to a position where it was no longer possible for the creditors to absorb the same and the financial condition of the creditors took a hit. They became financially weak and the internal equilibrium of the creditors were lost. They reached the verge of becoming bankrupt. With the condition of the creditors weakening, the whole economy was shaken. The economy reverted back into the slumber of recession and showed no signs of recovery. To recover the economy from the arms of recession, new bankruptcy laws were imposed which stopped the sudden increase of the bankruptcy filings and the situation of the creditors improved a bit because of the fact that the consumer started using alternatives of bankruptcy.

However, the use of these alternatives depended heavily on the threat of bankruptcy. When the consumers found that bankruptcy filing was no longer an easy deal, they started using debt settlement. The methodology of settlement is a simple one. The consumer hire professional settlement firms which advices the consumer to stop paying the creditor. As this happens, the creditor sells the debt to a collection agency for recovery. The negotiator then contacts the creditor and offers bulk repayment of 50% of the debt and also threatens that in case the creditor declines to wipe of the remaining and settle the debt, the consumer will simply go for bankruptcy because the consumer is not in a position to afford full repayment of the debt.

The creditor is afraid of bankruptcy filing because it knows that if the consumer really files for bankruptcy, the creditor will lose all its money and incur huge loss. The creditor therefore, agrees and waives at least 50% of the money that the consumer owes to the lender. This is how the bad economy makes it easy to negotiate credit card debt.

With the new FTC laws recently passed, debt settlement is a legitimate alternative to filing bankruptcy. Creditors are ready to negotiate and now you won't have to pay a fee unless your debts actually settle.

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