February 28, 2011 (Newswire.com) - Credit Card Debt Relief Laws - How New Laws Protect Consumers Seeking Debt Relief
Credit card debt relief programs have grown significantly over the past decade thanks to the stricter bankruptcy regulations put in place in 2005. Unfortunately, many consumers and small businesses that entered into debt relief programs were mislead and eventually ripped off. On October 27th, 2010 however new laws were passed by the federal trade commission that bans these companies from collecting upfront fees. Now they must actually perform and settle your credit card debt for a minimum percentage or you don't pay a single penny.
These laws have put nearly all of the shady debt relief companies out of business. The companies that made a killing off misleading consumers and collecting upfront fees know they cannot not survive with these new laws in place. However, the legitimate debt settlement companies that have a proven track record of negotiating successful settlement deals will ultimately benefit from this legislation. They will have enough confidence to collect their fees on the back end after they negotiate a successful deal.
Debt settlement programs only make financial sense for consumers and small businesses that are experiencing a legitimate financial hardship and that have at least $10,000 in unsecured debt. This debt relief option makes the most sense for those that are struggling to pay their bills and want to avoid bankruptcy. While a debt settlement will still negatively effect your credit rating, it will not be nearly as bad as filing bankruptcy. Bankruptcy typically will effect your credit score for at least 7 years while many consumers can recover from a debt settlement is 3 years.
Credit card companies and other creditors of unsecured debt are willing to make debt settlement deals. They are very concerned about the rising rate of delinquent accounts and know that if you file bankruptcy they will likely receive little to none of their money back. Knowing this, if they believe you are a legitimate candidate for bankruptcy they will be more than willing to negotiate and settle the debt for 40-60% of they balance. Some of their money back is better than nothing.
Before making any decision for debt relief, it is important to know all of your options. Check out the following link for a free consultation from a certified debt relief specialist in your area: