Fort Lauderdale Bankruptcy or Debt Settlement? New Debt Settlement Laws Protect You and Your Money

On behalf of Bankruptcy Law Firm of Clare Casas on Sunday, August 15, 2010.

Unscrupulous debt settlement companies may be a thing of the past when new rules go into effect in September, 2010. The new laws have three major changes:

1. The debt settlement companies will not be able to collect service fees unless they have successfully negotiated or settled at least one of your debts. Additionally, they must also spell out their fees in formal written agreements.

2. The agencies must also keep your money in a federally insured bank. As an added protection, your money must be placed in a dedicated account that is in your name and which you have control over.

3. Debt settlement companies will now be required to tell you the negative consequences of their services. One of the strongest advertising pitch of debt settlement is “avoid bankruptcy” – but what they don’t tell you is that debt settlement will impact your credit score similarly.

So what do you do if you can’t pay your debts? Linda Sherry, director of Consumer Action, suggests that your best bet is to get counseling from a non-profit credit counseling firm. In some cases, the best option really is bankruptcy because your debts are wiped out permanently. “I think a lot of people are afraid of bankruptcy, but for some people, it’s the best option.”