Debt settlement negotiation programs are now a much more legitimate option for consumers and small businesses seeking debt relief.
New federal laws which went into effect on October 27th 2010 ban settlement programs from collecting upfront fees.
Now clients won't have to pay a dime until their debt balances actually settle.
Making this industry performance based is indeed a victory for consumers seeking debt relief.
Before these laws were passed entering into a debt settlement negotiation programs used to be a very risky option and consumers ran the real possibility of paying large upfront fees without getting any real service in return.
There was no guarantee although many companies would promise they could cut a clients debt balance in half.
Many companies took advantage of this business model and simply collected fees without providing any real service.
This is not possible anymore.
All of the shady companies will be put out of business with this new legislation.
They simply cannot survive anymore by collecting upfront fees.
The legitimate debt settlement negotiation programs however will have enough confidence to collect on the back end when they reach a successful settlement deal.
They will have enough confidence to collect their fees when they actually earn it.
Debt settlement is seen as a legitimate alternative to filing bankruptcy.
Bankruptcy should always be the last option for debt relief especially considering these new laws that were recently passed.
Not only will bankruptcy hurt your credit score for at least 7 years but it will also carry several other negative consequences with it and should always be your last option.