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Back in 2005 there was a changeover in the bankruptcy laws. This reform changed the laws making it much more difficult for a American to file Chapter 7. This is an entire exemption of the debt owed. If a debtor dosen't pass the "means test" to enroll for Chapter 7 then they will have to file a Chapter 13. A Chapter 13 is a court ordered repayment procedure. In this process the court dictates what you will pay back to whomever you owe the debts for a five year period, by evaluating your finances in great detail.

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

This is a technique in which one must fall behind on their debts' while saving up the necessary funds 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 temporary negative effect on someone's credit history, it is no where near as bad as bankruptcy. Settlement is not made a public record like bankruptcy.

A debtor can anticipate saving themselves in the ballpark of 50% of what the debt was initially. And look to have themselves become free of the shackles of debt within a matter of two to three years for others much sooner. Making credit card debt settlement a much more attractive offer than bankruptcy.

The truth is in many cases debtors 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 compared to a Chapter 13 bankruptcy that will take five. Plus settlement being a private issue and not made a public record for the rest of your life, as with a bankruptcy. Then there is your credit rating, debt settlement looks a lot better than bankruptcy.

There are three ways that a debtor 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. Then a debt settlement company can be hired to assist in settling someone's debts. There are many reputable 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 protection retaining a law firm, and usually they can work out lower settlements as well. And being that lawyers must be reputable members of their States Bar Association you get the added protection in knowing that they must answer to a higher authority. There are far less scam organizations that are law firms then debt settlement companies.

Joe Rodgers is a debt analyst with the US Consumer Advocate, which practices debt relief.