Federal Debt Relief Laws - How New Laws Encourage Consumer Debt Clearance Deals

Federal Debt Relief Laws – How New Laws Encourage Consumer Debt Clearance Deals

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.

Bankruptcy neither 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.

Eliminating unsecured debts through a debt settlement program is considered …

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Free Debt Help - How New Bankruptcy Laws Make Debt Settlement a Popular Option

Free Debt Help – How New Bankruptcy Laws Make Debt Settlement a Popular Option

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 …

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