Credit Card Debt Negotiation – New Laws Help Consumers Negotiate Their Debt

The current recession has caused so much financial crises that most of the consumers are knee deep in liabilities. The unemployment rate has gone up and so has the inflation. Under these conditions credit card debts are causing a lot of stress which has in turn increased the number of filed bankruptcy. The increased number of bankruptcy has affected the economy of the State very adversely hence many are taking help of debt relief programs to get financial stability.

Debt settlement programs are used widely as a relief alternative since it removes a certain percentage of the debt making it affordable for the consumers. The new settlement laws have been made more consumers friendly. The settlement program is legal and there are several settlement companies in the market who perform it on behalf of the debtor.

According to the new settlement laws if the consumer owes more than ten thousand dollars in debt then they can negotiate a debt settlement. A successful debt negotiation can get a debt reduction of about 40 % to 60 % of the total balance. In this way the creditors can get back some money from the borrower instead of nothing had the customer filed for bankruptcy. Also they can show this settled debt amount for tax benefit.

This helps the debtor to pay off his debts easily without adversely affecting the credit score. It does not mean that debt settlement will not have any negative impact on the consumer’s credit score, but the effect will be much less than that caused by bankruptcy.

Hence it is in the benefit of the debtor to use settlement as an option to get out of debt. A good settlement negotiation can reduce up to 60% of the debtor’s debt.