Consumers are looking for legal options to settle their debts. One legal option was bankruptcy however, after the massive growth of bankruptcy filings after recession, the economy was badly effected and hence the Federal government came up with new bankruptcy laws which made filing for bankruptcy difficult. Of the other available methods, the method of settlement was the best that the consumers could avail.
In order to make debt settlement a legal and legit method,several laws and policies were brought into place which are now helping the consumers to settle their loans legals. The face of legality was given to the settlement process by the supply side policies taken by the government. With these policies the consumers were the direct beneficiaries. The creditors were given access to stimulus cash once they agreed for settlement deals. The stimulus cash was meant to cover the costs which the creditors failed to cover because of loss of principal money due to settlement deals.
On the other hand the loss of interest income was also covered by the reduction in the taxes that the creditors need to pay to the government. With these two policies the consumers were motivated to agree for debt settlement deals. Since the government policies were deliberately supporting settlement, the method was rendered to be legal.
To increase the legitimacy of the method, the FTC made it mandatory for the settlement firms to ask for service only after they settled the debts of the consumers. Up front fee collection is totally stopped because several settlement firms used this method of up front fee collection to fool the consumers. They took the money but never helped the consumers. With this act in place the settlement firms have no other option but to settle the loans first. Their failure will mean that they will not get the fee that they are supposed to get.
This way the Federal credit card debt relief act is helping the consumers to legally settle the debt of the consumers.
Debt settlement is a viable option to filing bankruptcy and is becoming increasingly popular amongst Americans with over $10k in unsecured debt. Creditors are ready to negotiate. You can literally eliminate 50% of your unsecured debt with a settlement.
