Federal Credit Card Debt Settlement Act - How New Federal Laws Help Consumer Debt Relief
Coming off one of the worst recessions since the great depression many consumers simply cannot afford to pay back their credit card debt. The federal government recently confronted this fact and passed new laws for consumer debt relief.
Online, February 22, 2011 (Newswire.com) - Consumer credit card debt continues to be a major problem for American consumers. Coming off one of the worst recessions since the great depression many consumers simply cannot afford to pay back their credit card debt. The federal government recently confronted this fact and passed new laws which help consumer debt relief options.
On October 27th 2010, new credit card debt settlement laws passed by the Federal Trade Commission went into place. These laws ban debt settlement companies from collecting upfront fees and provide much more protection on behalf of consumers. Now when a consumer or small business enters into a credit debt settlement program they will not have to pay a dime until their debts actually settle. Typically, the settlement services must completely eliminate at least 35% of the debt balance in order to collect a fee. Therefore, if a consumer has a credit card balance of $20,000, the settlement company must be able to eliminate at least $7,000 of that balance in order to collect a fee. They don't settle, you don't pay.
Credit card debt settlement is not intended for everyone. Just because you want to be bailed out of paying back your credit card debt in full does not mean you will qualify. Consumers must be experiencing a legitimate financial hardship and have at least $10,000 in unsecured debt to be considered for a debt settlement deal. Typically if creditors believe you are a legitimate candidate for bankruptcy they will agree to a settlement deal. This is because they know if you were to file and be accepted for bankruptcy they would likely receive little to none of their money. Knowing this, they would rather collect 50% of their money through a debt settlement rather than risk losing everything with bankruptcy.
Credit card debt settlement programs do work when done by the right company. The best companies have established relationships with all the major creditors and can typically get a better settlement deal than consumers can by themselves. If you have over $10,000 in unsecured debt and are experiencing a legitimate financial hardship then a debt settlement can make financial sense. While you can expect to have your credit negatively effected in the short run, this is a trade off to be able to have 40-60% of your unsecured debts eliminated.
Check out the following link to find legitimate credit card debt relief programs in your area: