Consumer Debt Settlement Protection Act - Why New Federal Laws Help Debt Settlement

Consumer debt settlement protection act was actually established by federal trade commission.
The main aim behind the introduction of this act is to protect the consumers from fraud and fake settlement companies.
Debt settlement is the best method for bringing reduction in the amount of debt but still people are not willing to adopt it.
Actually people are afraid of getting trapped in to the net of fake and scam settlement companies.
These companies bring the person in to more financial problems rather than taking him out of the miserable circle of debt.
Due to these fake and illegal businesses, the reputation of debt settlement was also effected.
These companies actually take the service fees from consumers in advance and then did not negotiate with lenders.
Due to these malpractices, people lost their trust over debt settlement deals.
They started moving towards the option of bankruptcy, as people found themselves more secured and safe in filing for the petition of bankruptcy.
Due to the increasing ratio of bankruptcy the lenders and borrowers both are facing the situation of loss, in fact it is correct to say that the whole economy is going through the phase of monetary loss due to the alarming increase in insolvency cases.
In order to restrict the people from bankruptcy and encourage them towards debt settlement deals, the federal trade commission made consumer debt settlement protection act.
The act simply states that the settlement/negotiation company is not legally liable for charging the services fees from consumers in advance.
They can ask for the fees only after lending the services properly and successfully.
This act has washed out all fake and scam settlement firms from the market and now only those firms are present that are working under the new act.
This act is gives more financial security to consumers, now they don't have the fear of getting cheated by fake firms.
Debt settlement is the best way for the elimination of debt, this process is considered best from both lenders and borrowers aspect.
After the new laws, the process of settlement is getting more famous and popular.