It is no doubt that recent economic condition created a black hole in US economy. People were kicked out of the jobs, a considerable amount of employers received reduced salaries, extra bonuses and fuel reliefs were wiped out. It is no wonder that people are left in a desperate mood. Many credit card holders found this situation worse with their spending habits. They were left out with piled debts.
So, what is the government solution for this? It is Debt settlement. It is the medium through which the federal government of US trying to heal the fracture of the economy. In other words, a down turn in US economy has far- reaching implications. Especially to the countries who depended on US economy. This remedy is beneficial for both the parties- the debtor and the creditor. How?
If a consumer files a bankruptcy and if it is accepted by the bankruptcy court, the creditor will not be able to grab even a dime of the money, the debtor owe to them because bankruptcy is a state where the debtor is relived from all his debts. True that it is a social disgrace and damage to the credit report. But once there is a bankrupt, no one can interfere with his life, threaten him and demand late fees. So, the creditors know this process clearly. Additionally, they keep an eye on recession to see how it is going on. The report suggests that it will be worse in time to come. Therefore, they agree to settle consumer debts for less in order to recover at least a portion of their money. This is for their survival.
On the other hand, the consumers too are benefited. They can reduce their debts for less and safeguard their good standing with creditors. Apart from this advantage, the new F.T.C. reforms ban the debt reduction companies who take upfront fees. The consumer is bound to pay the service charge only after getting a better deal with the creditor. Thus, it is no wonder that these reforms avoid fraud and deception in this field and ensures consumer safety.
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