Credit Card Debt Relief Act 2010 - Why Creditors Are Making More Debt Settlement Deals

Credit card debt is something that almost every American can relate to. Thanks to unregulated lending practices over the past two decades there are now more Americans in credit card debt than at any other point in history. Bankruptcy used to be an easy solution to get out if debt but the new laws passed in 2005 make filing much more difficult to qualify for. As a result, many consumers have turned to debt settlement to avoid bankruptcy. This used to be a very risky decision for the consumer but with the passage of the Credit Card Debt Relief Act, it is now much easier to settle credit card debt.

Filing Bankruptcy

From the customers point of view bankruptcy carries some real negatives. Property can be seized. Many people lose their automobile making life very hard indeed. Credit ratings are decimated. This creates a situation where major purchases will have to be put off for as long as 10 years. Bankruptcy is the most extreme and damaging means of eliminating debt.

Creditors also have the worst of all possible scenarios in a chapter 7 filing. It can take literally years for a credit card company to receive any payment at all from a bankruptcy court. Worse yet, credit card debt is unsecured debt and therefore may not get paid off at all under bankruptcy laws. Many times credit card companies receive none of their money back when a consumer files bankruptcy. Knowing this and the fact that there are more Americans in credit card debt than ever before, credit card companies are having no choice but to make debt settlement deals.

Debt Settlement

With debt settlement, credit card companies still receive some payment and in a much more timely fashion. That makes for better monthly bottom lines and healthier quarterly earnings for investors which is what the credit card industry leaders need most. In 2009, the average debt reduction with a debt settlement process was 50% although results vary case by case. With debt settlement, consumers are saved from bankruptcy and creditors collect at least some of their money back.

On July 28th 2010 new regulations were passed by the FTC which bans the practice of debt settlement companies collecting large upfront fees with no performance guarantee. The days of these debt relief services taking consumers’ fees without actually settling any debts are over. Now they will have to actually settle the debts to get paid. These new regulations have made the debt settlement industry much more legitimate and clearly a better alternative than filing bankruptcy.

Check out the following link to get free debt advice from a debt relief specialist in your area. They will go over all your debt relief options for free and help you determine what option makes the most financial sense for you:

FreeDebtReductionHelp.com

Contact Information

Michael Smith

COO

United Debt Associates

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