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Debt Settlement: A New Era of Consumer Advocacy

Have you ever had an experience where the fault of one ruined an event for everybody involved? For example, your little brother or sister sustained a serious injury from skateboarding, so your parents banned you from the activity as well? Rather than enjoying skateboarding in a safe way, the thrill and fun is completely off-limits. Maybe it was a different scenario in your life; but the bottom line was still, ‘bummer for you.’

It turns out that similar logic applies to the debt settlement industry. What is a very helpful and necessary tool of consumer advocacy has long held a poor reputation due to the fault of a few ‘bad apples,’ so to speak. Prior to October 27th, 2010, many debt settlement companies employed the practice of charging consumers service fees before actually settling any of their accounts. Of course, many of these consumers were in the midst of extreme financial hardships like unemployment and illness. In effect, these advance fees served to kick somebody who was already down and out. However, a new FTC ruling that bans advance fees creates a new climate in which reputable debt settlement companies can thrive.

Yet even in this mess, many reputable debt settlement companies did, and still do, offer a much-need service for consumers who would otherwise file bankruptcy. By negotiating with consumers’ creditors on their behalf, reputable professionals secure great settlements, and do not charge fees until at least one consumer account is settled.

Settlement is also becoming a necessary service to all involved in the collection process. Rather than fronting astronomical court costs to sue consumers, creditors and collectors stand a much higher chance of recovering more lost funds by working with reputable debt settlement companies. Too much collection litigation is clogging small claims courts, slowing them down to the detriment of society at large.

What’s more is that when a consumer simply cannot pay on the creditor’s terms, legal action often forces them into bankruptcy. When this happens, everyone involved loses. The creditor or collector loses the original balance of the accounts, plus the money spent on court costs. And, rather than forcing society to pick up the tab for bankruptcy filings, debt settlement allows consumers to honor their debts to the best of their ability. Though circumstances prevent many consumers from paying debts on creditors’ terms, there is simply no logic in suing a consumer who is otherwise able to pay via debt settlement.

In this reality, debt settlement is a critical tool of consumer advocacy. Why not do everything possible to help pull this nation back to its feet? Unemployment, plummeting home values, illness, and more all contribute to a lackluster economy. Why lose even more by unnecessarily painting consumers, creditors, and society into a corner with bankruptcy? When practiced correctly, debt settlement can truly benefit all involved.

 

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