subject: Credit Card Debt Relief - The Impact Of New Regulations On Debt Relief Companies [print this page] Credit Card Debt Relief - The Impact Of New Regulations On Debt Relief Companies
After recession hit the United States of America, government has been keen to make new laws and regulations to stabilize and restore the declining financial system. These set of laws have directly affected the debt relief companies, their way of working and dealing with the consumers. Consumer's precedence has also changed on the basis of the leisure provided in these regulations.
At the start of the recession most of the debtors started filing bankruptcy, which had brutal effects on the financial system of the country. Government introduced new laws to discourage bankruptcy and making its alternatives i.e. Debt Consolidation and Debt Settlement, more popular and feasible for the debtors as well as the creditor.
The first step that government took was Stimulus Cash. Though it was not a regulation but it was the foremost step in which millions of dollars were induced into the banks and financial institutes to keep them in business. This stimulus cash was only available to the companies offering debt relief programs, for their financial and organizational expenses.
The new law by FTC (Federal Trade Commission) implemented in July 2010 had the highest impact on the debt relief companies. This law stated that no settlement company could charge the consumer upfront fee, which threw the fake and fraudulent companies out of the market. Now, the companies can only charge the debtor a percentage of the reduction in the debt amount.
If any company asks for upfront payment, a heavy fine of &16,000 can be imposed on it. The maximum settlement fee was also fixed to be 15% of the reduction in the debt amount, so the consumer needs not to worry about being overcharged. This law has also restored debtor's faith in the settlement process and more people are opting for relief programs other than filing bankruptcy.
The last was Tax Breaks for the firms offering relief program. This was a step to encourage the creditor to negotiate on the debt reduction and offer debt relief to the debtor. Due to these Tax Breaks the creditor offering relief programs have to pay lesser tax than the others. These rules have greatly impacted the debt relief companies and they are eager to talk and make gigantic reductions in their amount.
Debt settlement is a legitimate alternative to filing bankruptcy. Consumers can expect to eliminate around 50% of their unsecured debt with the help of a legitimate settlement program. With the new FTC laws recently passed in July 2010, debt settlement is a much less risky option. If they don't settle your balance you don't have to pay a dime.
Check out the following link for free help from a certified debt relief specialist:
