The executive director of the U.S. Organization for Bankruptcy Alternatives, the Houston-based trade group representing the debt settlement industry, said that, debt settlement has helped many people become solvent and come out of debts, who might otherwise have filed for bankruptcy during their financial crisis with no other alternatives. Debt settlement companies are now frequently advertising on television and radios. Billions of debts have been settled so far in the recent years and in the years to come. Debt settlement does have some adverse effects, it does not protect a debtor from lawsuits and it can hurt credit rating as well. Some people have tried debt settlement and paid the settlement companies thousands of dollars but have ended owing more money than when they started with. There are some official complaints from people regarding this, stating that settlement companies had done nothing to resolve their problem and had landed them no where other than filing for bankruptcy.

Payment is usually a percentage of a person's total debt amount; Most of that money is to be paid up front. Debtors are asked to stop making all payments to their creditors and allow their debts to be sold to a collection agency or be transferred to a third-party debt collection company. This is how a settlement works. On an average, settlement companies can reduce debts to an average of just 53% that had been observed, the amount is so less probably because the settlement companies only reduces the interest and the fees and not the principal amount. A settlement company often has more success than an individual working alone, for a number of reasons.

The burgeoning industry is not regulated with proper laws in most of the states. Montana lawmakers in 2009 had passed a law requiring companies to be licensed and regulated by the attorney general so that the companies do not go into scam acts. Debt settlement does not protect consumers from being sued by their creditors. This is one of the disadvantages of the debt settlement companies. If a consumer is participating in a legal and licensed program; the creditors should not be allowed to sue them. There should be uniform laws regarding settlement for all states laws regulating the industry, but debt settlement do not apply for all. There are people who are too far behind on their bills to be helped by consumer counseling and are very near bankruptcy. For those, debt settlement can be of help.

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