New credit card debt settlement laws have changed the way in which the debt relief industry operates.
Now when a consumer or small business enter into a debt settlement program they must actually live up to their promises and settle your debt for at least 35% of the overall balance.
Considering these new laws, debt settlement has become a viable option to avoid bankruptcy and eliminate up to 60% of your credit card debt.
The last thing that credit card companies or any other creditors of unsecured debt want is for you to declare bankruptcy.
They know that when you file for bankruptcy they will likely receive little to none of their money back.
In order to avoid a complete loss, if they believe you are a legitimate candidate for bankruptcy, they are more than will to agree to settle the balance for a lesser percentage.
With these new credit card debt relief laws in place, the relief companies must eliminate at least 35% of your balance in order to collect a fee.
So if you have $20,000 in credit card bills, the debt relief company would have to completely eliminate at least $7,000 of the balance in order to collect a fee.
The fee will typically be around 10% of your overall debt.
So at the end of the day, the least amount of debt you will eliminate is 25%.
That is however assuming you will qualify for a debt settlement.
In order to qualify you must have at least $10,000 in unsecured debt and be experiencing a legitimate financial hardship.