Credit debt relief programs were once though to be a very risky option for getting out of debt for good reason.
There were to many shady debt relief services that would take advantage of debt ridden consumers and rip them off by charging large upfront fees without providing any beneficial service.
Well, this is not possible anymore.
Thanks to new federal laws, credit debt relief programs have finally become a legitimate option for consumers and small businesses.
The new federal laws ban debt settlement companies from collecting upfront fees.
The only way they get paid now is when they negotiate a successful settlement deal and eliminate at least 35% of the consumer's over debt balance.
35% is just the minimum standard and most legitimate services should be able to negotiate a 40-60% reduction.
What used to be a very risky decision, is now a legitimate way for consumers going through financial hardship, to get real relief.
Only unsecured debt can be negotiated via the settlement process.
Unsecured debt includes things such as credit card debt, medical bills, IRS tax debt, and other charge cards that do not have an asset backing it up.
Creditors of unsecured debt understand that if you file and get accepted for a CH.
7 bankruptcy, they will likely receive little to none of their money back.
Knowing this they'd much rather negotiate and settle for a lower amount.
50% of their money back is better than nothing.
So if you are on the verge of bankruptcy and have at least $10,000 in unsecured debt, credit debt relief programs can make financial sense.
While your credit score will take a little hit in the beginning, it's a trade off you have to make in order to eliminate up to 60% of your balance.