subject: Consumer Debt Settlement Protection Act - How New Federal Laws Help Debt Settlement [print this page] Consumer Debt Settlement Protection Act - How New Federal Laws Help Debt Settlement
Federal laws are helping the debt settlement process. This help comes in two formats. First promoting the settlement programs and second protecting the settlement firms. For the purpose of promotion, the federal government announced that the creditors who will agree for settlement deals with the debtors, will get federal aid to cover up the loss that the creditors incur during a settlement process. The aids spoken of are the stimulus cash and the tax reductions.
The cash element gives the liberty to the creditors to use the money to cover the costs that the companies have. The tax reduction element ensures that the loss is not augmented by the huge income tax levels with reduced income through interest earnings. It is because of these motivating factors that the lenders are now open to settlement deals and this has promoted the settlement programs.
Coming to the protection aspect, the federal law announced that the settlement firms will have to first provide true and effective service before they claim their fee. In other words, up front fee collection was no longer allowed. This save the consumers from getting cheated by the fraud companies which took the money in advance and then never helped. Now only those companies can survive in the market which can provide the service and sustain the costs involved in negotiation during the period of settlement.
If they can't, they have to leave the industry. This way, the settlement industry will have a fair playground and the consumers will find some legit and authentic settlement services and can get out of their debts easily. This is how the federal laws help debt settlement.
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.
