Credit card debt settlement relief programs have been around for nearly 10 years however they have never been so advantageous and appealing for consumers in need of debt relief. This is because of the new federal laws passed on October 27th 2010 which banned debt settlement companies from collecting upfront fees. Now, if they can’t settle your debt, you don’t have to pay a dime.
These new federal laws go a long way in making the debt settlement process a much more legitimate option for consumers and small businesses. Since you don’t have to pay upfront fees anymore the risk has been significantly mitigated. The risk has been transferred from the consumer to the debt relief company. They don’t get paid unless they reach a successful settlement deal and settle your debt for at least 35% of the balance. Therefore, if you have $20,000 in credit card debt, they must successfully eliminate at least $7,000 of that balance in order to get paid.
These settlement programs are not intended for individuals simply looking to get bailed out of their credit card debt. You must be experiencing a legitimate financial hardship and have at least $10,000 in unsecured debt in order to qualify for most settlement programs. The ideal candidates will be struggling to pay their credit card bills and be on the verge of bankruptcy. If you are on the verge of bankruptcy in would be wise to consider a settlement instead of filing bankruptcy. Bankruptcy will effect your credit score much worse than a settlement and considering these new laws it is clearly a better option.
If you have over $10,000 in unsecured debt it may be a wise financial decision to consider a debt settlement. Due to the recession and overwhelming amount of people in debt, creditors are having no choice but to agree to debt settlement deals.
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