Debt settlement negotiation programs used to be a very risky option for consumers seeking debt relief.
Not anymore.
New federal laws passed on October 27th 2010 have made settling credit card debt much easier for consumers and small businesses.
Now debt settlement companies are banned from collecting upfront fees from their clients.
If they can't successfully settle your debts for less, you don't pay a dime.
These new federal laws have made the debt settlement industry much more legitimate and an overall better option for consumers seeking debt relief.
This major risk of entering such a program has been significantly reduced.
Since it is now a performance based service, you won't have to pay a fee unless you get results.
The average settlement is negotiated for 40-60% of the balance.
After the passage of these new federal laws most debt settlement negotiation programs will guarantee that they can eliminate at least 35% of your balance.
This means that if you have a $20,000 credit card balance and they can't get at least $7,000 of it eliminated, then you won't have to pay for their services.
Just because you want to eliminate some of your unsecured debt does not mean you should enter into a settlement program.
You must have at least $10,000 in unsecured debt and be experiencing a legitimate financial hardship to qualify for most debt settlement negotiation programs.
This does not come without consequence.
You will experience a short term drop in your credit score.
While you will experience a short term drop in your credit score, this is a trade off to have 40-60% of your unsecured debt completely eliminated.
Ultimately you can repair your credit score after your balance is settled because your debt to income ration will be much better.