subject: Getting Out Of Debt - How New Federal Laws Help Consumer Debt Settlement Programs [print this page] Getting Out Of Debt - How New Federal Laws Help Consumer Debt Settlement Programs
The recession led economic meltdown caused great havoc in US. The consumers lost stability in their financial life and the panic among the consumers paved the path for crisis among the creditors. The loss of jobs and fall in income level of the consumers led to a vicious circle of financial troubles which engulfed the creditors and the whole economy. The failure to repay the debts forced the consumers to file for bankruptcy. With the sudden boost in bankruptcy filing, it was found that the loss of the creditors multiplied at an alarming rate. The creditors lost their internal financial stability and they started moving along the path which led to bankruptcy and operational shutdown. This ill fate of the consumers followed by the creditors was enough to force the entire economy to tumble down to the struggle of existence.
The only way out of this was to stop the pace of bankruptcy filing with immediate effect. The Federal laws on bankruptcy were changed and implemented to restrict the ever increasing impact of recession. The bankruptcy laws were modified and it was made mandatory for the consumers to qualify for the same. They were required to first clear means test and only when they clear the test, they were allowed to file for bankruptcy. This slowed down the pace of bankruptcy as majority of the chuck failed to clear the test. This happened because of the fact that most of the people had a mean monthly income greater than minimum monthly expenditure level defined by law.
With this restriction, people opted for debt settlement as the available alternative. To motivate the creditors to agree for debt settlement, the government announced two things:
Granting access to stimulus cash.
Granting the benefit of tax reduction.
These announcements meant that the creditor who waive the debt of the consumers by 50% or more will have access to the stimulus cash to cover their costs and also, they will have to pay less taxes compared to before to make sure that the loss due to loss of interest income can be covered. With these new policies in place, the creditors started accepting more and more debt relief programs and thereby helping the consumers to get out of their debts. Also the government policy which forced the settlement firms to first help the consumers and then ask for fees increased the trust of the consumers on settlement and other relief options. This way the new Federal government laws have helped the consumer debt relief programs to flourish.
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.
