Back in 2005 there was a changeover in the bankruptcy laws. This reform changed the laws making it much harder for a consumer to qualify for Chapter 7. A Chapter 7 will discharge the debt owed in it's entirety. If a consumer does not pass the "means test" to enroll for Chapter 7 then they will have to file a Chapter 13. With a Chapter 13 the court will evaluate your entire financial state of affairs to come to a determination how much you will be forced to pay back towards your debts within the next 5 years.

As you can most likely tell a Chapter 13 for most is not as appealing of a deal as what a Chapter 7 is. This drives many individuals away from going bankrupt to look for alternative systems of credit card debt relief. One of the quickest growing and more attractive debt relief techniques then becomes credit card debt settlement.

This is a technique in which one must fall past due on their debts' while saving up the necessary money on the side, to then negotiate a one time settlement, at a much reduced amount from the balance owed. While debt settlement does have a short term harmful effect on someone's FICO score, it is not anywhere near as negative as bankruptcy. Plus debt settlement is not by any means a public record, however a bankruptcy will be a public record for the rest of the persons life.

A debtor can anticipate saving themselves around 50% of what the debt was initially. And look to have themselves become freed from the prison of debt within a matter of 2-3 years for others much sooner. Making credit card debt settlement a much more attractive offer than a Chapter 13 bankruptcy.

The fact that in many situations consumers will end up saving 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 three years. When in comparison to a bankruptcy that will take five. Plus settlement being a private issue and not a publicly known record for the rest of your life, as with a bankruptcy. Then there is your credit rating, debt settlement comes off as being a lot less negative than bankruptcy.

There are three ways in which one can settle the debts they owe. One is they can do it themselves, which is to a great extent 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 help settle someone's debts. There are many good debt settlement companies however one must due diligence on a company to make sure they are reputable and honest. Then you can contact a debt settlement attorney as well. You can get more security retaining a law firm, and the majority of the time they can work out lower settlements as well. And being that lawyers must be reputable members of their States Bar Association you get the further protection in knowing that they must account to a higher authority. There are far less dishonest operations that are law firms then debt settlement companies.

Joe Rodgers is a credit card debt analyst with the US Consumer Advocate, which practices in credit card debt reduction.