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Don't Pay a Dime Until Your Debt Is Settled
The Federal Trade Commission (FTC) is an organization which has been established for the welfare of the consumers. The aim of this organization is to come up with laws and regulations to protect the consumer from being cheated by companies. One of the regulations passed by the FTC states that the consumer need not pay a dime to the debt settlement companies until the debt has been settled. This law also states that the settlement companies have to provide a complete detailed structure of their modus operandi to the consumer.
Due to the recent economic crisis in the USA, millions of Americans were on the verge of bankruptcy. Reckless lending habits of the Americans resulted in huge debts in unpaid bills, large outstanding credits etc. As a result the creditors and borrowers were in a fix. Then, not much sought option of debt settlement seemed a possible solution. Debt settlement companies were approached by the consumers and negotiations were carried out between the lenders and borrowers. Before the regulation was passed, the companies used to demand upfront fees without a guarantee of a proper settlement. Many a times the consumer was at the losing end if no agreeable result was reached. The companies also had a 'NO REFUND' policy. This added to the woes of the consumer. But due to the new 'Don't pay a dime until your debt is settled' law, the consumer has benefitted in a great way.
Now, the borrower need not pay the settlement company any fees before the settlement is reached. The company has to reach a settlement which is typically 35% of the remaining amount. Once the amount is finalized the lender has around 10-15 weeks to pay off the outstanding balance. In some cases the entire amount has to be paid immediately. This new regulation has forced the companies to work in an ethical way and follow certain principles.
If in case the lenders refuse to accept the settlement amount, the consumer has all the rights to file for bankruptcy. In which case, the creditors stand to lose everything! To avoid this scenario, they have started honoring almost all the settlement deals coming their way. The bankruptcy threat does not always go well with the consumer because their credit report becomes negative. As a result, they may not be eligible for any loans for upto 10 years. Some companies have their own settlement agencies which are not affiliated to them on paper but help reach a mutually agreeable deal. Any individual or an enterprise having $10K as bad debt can go for this as a viable option.
Due to the recent economic crisis in the USA, millions of Americans were on the verge of bankruptcy. Reckless lending habits of the Americans resulted in huge debts in unpaid bills, large outstanding credits etc. As a result the creditors and borrowers were in a fix. Then, not much sought option of debt settlement seemed a possible solution. Debt settlement companies were approached by the consumers and negotiations were carried out between the lenders and borrowers. Before the regulation was passed, the companies used to demand upfront fees without a guarantee of a proper settlement. Many a times the consumer was at the losing end if no agreeable result was reached. The companies also had a 'NO REFUND' policy. This added to the woes of the consumer. But due to the new 'Don't pay a dime until your debt is settled' law, the consumer has benefitted in a great way.
Now, the borrower need not pay the settlement company any fees before the settlement is reached. The company has to reach a settlement which is typically 35% of the remaining amount. Once the amount is finalized the lender has around 10-15 weeks to pay off the outstanding balance. In some cases the entire amount has to be paid immediately. This new regulation has forced the companies to work in an ethical way and follow certain principles.
If in case the lenders refuse to accept the settlement amount, the consumer has all the rights to file for bankruptcy. In which case, the creditors stand to lose everything! To avoid this scenario, they have started honoring almost all the settlement deals coming their way. The bankruptcy threat does not always go well with the consumer because their credit report becomes negative. As a result, they may not be eligible for any loans for upto 10 years. Some companies have their own settlement agencies which are not affiliated to them on paper but help reach a mutually agreeable deal. Any individual or an enterprise having $10K as bad debt can go for this as a viable option.
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