In 2005 there was a modification in the bankruptcy legislation. The change in the law has made it much harder for a consumer to file Chapter 7. Which is a full exemption of the debt owed. If a consumer dosen't pass the "means test" to qualify for Chapter 7 then they will have to file a Chapter 13. With a Chapter 13 the court will analyze your entire financial situation to decide how much you will be forced to pay back towards your debts over the course of five years.

So evidently a Chapter 13 is not as attractive of an offer as a 7. This moves the majority of debtors away from filing bankruptcy to look for alternative methods of credit card debt relief. One of the quickest growing and more attractive methods then becomes credit card debt settlement.

This is a process in which one must fall past due on their credit cards while saving up the necessary money on the side, to then negotiate a one time settlement, at a much reduced sum from the original balance owed. While debt settlement does have a short term harmful effect on someone's credit rating, it is not anywhere near as bad as bankruptcy. Plus debt settlement is not by any means a public record, however a bankruptcy will be a public record for the entirety of the consumers life.

A debtor can anticipate saving themselves around 50% of what the debt was at first. And look to have themselves become free of their debts within a matter of two to three years for some much sooner. Which makes credit card debt settlement a much more attractive proposal than bankruptcy.

The fact that in many cases consumers will save more money with debt settlement, is almost reason enough. On top of the fact that the longest it will take to be debt free is 3 years. When compared to a bankruptcy that will take five. Plus settlement is a private matter and not made a public record for the remainder of your life, as with a bankruptcy. Then there is your credit rating, debt settlement appears a lot better than bankruptcy.

There are three ways in which one can settle the debts they owe. First off you can do it yourself, which is deeply advised against if you don't know how to negotiate properly. Then a debt settlement company can be hired to help settle someone's debts. There are many reputable debt settlement companies however one must due diligence on a company to ensure they are reputable and honest. Then you can contact a debt settlement attorney as well. You can get more safety retaining a law firm, and usually they can negotiate lower settlements as well. And being that attorneys must be accredited members of their States Bar Association you get the further protection in knowing that they must answer to a higher power. 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.