Debt Settlement Solutions - How the Government Has Made Bankruptcy Less Favorable

It seems that debt is becoming more and more prevalent nowadays. This can work to your advantage if you too are in debt and are looking for a solution which is better than bankruptcy. Due to the large number of consumers in debt, the government was forced to do something about it and try to help them clear debt.

Firstly the government had to stop people from using the wrong option. Bankruptcy does more harm than good and consumers needed to be discouraged regarding using this option. There are new government regulations that state that bankruptcy needs more paperwork and the time to prove your inability to pay back your debt is longer. It will take an year or so to declare yourself bankrupt, and in this period you will have to collect all your legal documents and you will also have to pay a lawyer so that you are represented in a court. It will be a stressful period and the lawyer fees are quite high, this is no time for spending money in a irregular fashion.

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After this, consumers needed an option that works and that will also help the declining economy. Debt settlement soon proved to be the best debt relief option available for consumers with deep unsecured debt. Debt settlement can make the creditors reduce your debt by half just after some simple negotiations done by a debt settlement company.

You may wonder why would a credit card company accept to reduce your debt? There are a few reasons for this. One of them being stimulus money.

Stimulus money are founds which are set aside each year by the government just for this purpose. They are given to the big credit card companies so that they can afford to reduce your debt and not be forced to increase interest rates to cover expenses. The government did not stop here, besides stimulus money, they also granted tax relief. The reduced amount counts as an income and so it can be taxed, but with the help of tax relief, you will not have to worry about this fact.

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