Back in 2005 there was a changeover in the bankruptcy laws. This reform changed the laws making it much harder for a American to qualify for Chapter 7. A Chapter 7 will discharge the debt owed in it\'s entirety. If a consumer dosen\'t pass the \"means test\" to be excepted for Chapter 7 then they must look to go through what\'s called a Chapter 13. With a Chapter 13 the court will analyze your entire financial circumstance to figure out how much you will be forced to pay back towards your debts within the next 5 years.

As you can almost certainly tell a Chapter 13 for most is not as nice of a deal as what a Chapter 7 is. This moves most consumers away from filing bankruptcy to look for other systems of credit card debt relief. One of the popular and more attractive debt relief techniques then becomes credit card debt settlement.

This is a method in which one must default on their unsecured debts while saving up the necessary cash on the side, to then negotiate a one time settlement, at a much reduced sum from the balance owed. While debt settlement does have a temporary harmful effect on someone\'s FICO credit rating, it is no where near as bad as bankruptcy. Plus debt settlement is not by any means a public record, however a bankruptcy will be a public record for the entirety of the consumers life.

A debtor can be expecting to save themselves in the ballpark of 50% of what the debt was at first. And look to have themselves become free of the shackles of debt within a matter of 2-3 years for others much sooner. Making credit card debt settlement a much more attractive offer than bankruptcy.

The truth is in many situations debtors will save more money with debt settlement is almost reason enough. On top of the fact that the maximum it will take to be debt free is 3 years. When compared to a Chapter 13 bankruptcy that will take five. Plus settlement being a private issue and not a publicly known record for the remainder of your life, as with a bankruptcy. Then of course the issue of the credit report, debt settlement looks a lot less negative than bankruptcy.

There are three ways someone can settle the debts they owe. One is they can do it themselves, which is greatly advised against if you don\'t know how to negotiate properly. If someone cant do it themselves then a debt settlement company can be hired to assist in settling someone\'s debts. There are many ethical debt settlement companies however one must due diligence on a company to ensure they are reputable and honest. Then you can contact a debt settlement lawyer as well. You can get more protection utilizing a law firm, and often times they can work out lower settlements as well. And being that attorneys must be reputable members of their States Bar Association you get the further protection in knowing that they must report to a higher power. There are far less scam operations that are law firms then debt settlement companies.