The majority of the
Americans find themselves struggling with overwhelming debts day by day due to
the recent economic depression. In their depression, many consumers have
selected debt settlement companies which show them up in big advertisements and
ultimately ended up in sinking them deeper into debt. In this situation they
did not find any remedy than filing a bankruptcy case. That is the only way out
to be free of getting harassment calls from the collection agencies.
does any good to consumers, nor to the creditors. It blocks the whole financial
future of the victim as well as causes the gradual downfall of the financial
establishments. The introduction of new
meant to minimize the above cycle growing too far.
In the past, the
creditors did not like to have settlement deals with debt relief companies
because they wanted the consumers to pay them in full. But recession turned
their expectations upside down as the consumers started filing bankruptcies
instead. This alarmed the creditors and they understood that they will not be
able to recover at least a portion of money that was owed, if they continue
their aggressive way. Thus, the new federal debt laws assure that though the
consumers pay their debts in half way, their account will be settled as a
‘payment made in full’.
Under the new laws,
the protection of the consumer is guaranteed at the beginning of the debt
settlement program. The F.T.C. laws prevent the debt relief companies from
charging on any service fee at the beginning of the program. This method
prevents scams and fraudulent companies entering this business. On the other
hand, it provides a chance for all the debtors to try it without entrusting
their last few dollars.
debts through a debt settlement program is considered legitimate according to
the new laws. Therefore, take time to go through this program and regain your
What are the various
points because of which debt settlement has overtaken bankruptcy as the most
popular debt relief option? The first modification made by the 2005 amendment
was the compulsory credit counseling session done within 180 days of filing of
a chapter seven bankruptcy.
If the government
approved expert does not agree to such a move, you obviously are going to face
a lot of problems. The credit counseling session can come up with serious
complications especially after you have filed for bankruptcy.
As you would know, the
60 day period after bankruptcy is very important and the lenders invariably
file dispute charges against the borrower with in this time frame. If the
credit counseling session does not go in your favor, you certainly are going to
end up with complications on your hand.
Secondly, the means
test introduced by the law means that you will have to satisfy the court that
you do qualify for chapter seven. Merely your opinion that you are facing debt
problems is not going to suffice. The opinion of the court and the satisfaction
of the judiciary matters a lot. In such a scenario, there is a possibility that
your planning for chapter seven bankruptcy may go waste as the law may order
you to go in for a chapter thirteen bankruptcy.
Thirdly, nobody wants
to let go of their assets. However, hiding the list of assets from the court in
a bankruptcy proceeding can be very dangerous. There is a possibility that the
individual may end up going to jail because the promise made to the court is
made under oath and at the risk of punishment for perjury.
In such a scenario, a
debt settlement deal which is nothing but a private contract between the lender
and the borrower is a preferable option. Nobody wants to make the mistake of
relying on the court and its excessively technical and cumbersome formalities
when alternatives are present.
Finally, the increase
in the settlement percentage for debt negotiation deals and the increase in the
fees for bankruptcy because of the increase technicalities mean that the two
options are no longer very different as far as the cost is concern.
This compared with the
fact that the debt relief service providers can be easily allocated and,
identified and employed on the World Wide Web means that the convenience factor
always raise in favor of debt settlement. All these are the reasons why more
and more people are going in for a settlement deal before they think of filing