A person who settles his debts through this process is able to regain his financial freedom in a few months. The Federal Trade Commission has made new laws in order to provide relief to both creditors and debtors. In the past, settlement companies provided very poor quality services to their clients. Due to this degradation, many people started filing bankruptcy petitions. According to the stats provided by U.S court, the number of non-business filings reached to 1,412,870 in 2009. It is obvious that this trend was due to the global economic recession But in 2010, this number increased by 14%. So, there was one answer to this question. It was poor quality of services provided by settlement companies and poor response of credit card companies.
This mounting number of filings made many creditors worried about their incomes. So the government of United States signed a new bill that is in favor debtors for getting out of debts. This bill is a bailout process for creditors. Actually, creditors increased their interest rates but it could help them in recovering their money. So now some companies have started slashing their interest rates. According to the new Act, settlement companies have to make a deal with their client’s creditors and then they can charge their fees. Upfront fees are totally banned. In the past, many illegal companies started scam business. They charged thousands of dollars from their clients and then did nothing. This new law will throw out all these illegal agents. They cannot take huge fees. There is certain portion of the total settled amount that is paid.
For getting out of debt, debtors can also try other options like debt consolidation and credit counseling but this process is more reliable and authentic. Over the past few years, number of complaints against these programs has significantly reduced. For many reasons, debt settlement is much better than filing bankruptcy. Debts do not remain fixed all the time. They keep on increasing day by day so try to settle them as early as possible.
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