In 2005 there was a reform in the bankruptcy legislation. The change in the law has made it much harder for a person to file Chapter 7. A Chapter 7 will completely wipe the slate clean of the debts owed. If someone does not pass the "means test" to be excepted for Chapter 7 then they must look to go through what's called a Chapter 13. With a Chapter 13 the court will examine your complete financial situation to figure out how much you will be forced to pay back towards your debts within the next 5 years.

As you can probably tell a Chapter 13 for most is not as appealing of an offer as what a Chapter 7 is. This forces the majority of debtors away from filing bankruptcy to look for other systems of credit card debt relief. One of the quickest growing and more attractive debt relief techniques then becomes credit card debt settlement.

This is a technique in which one must default on their unsecured debts' while saving up the required funds on the side, to then negotiate a one time settlement, at a much lowered sum from the original balance owed. While debt settlement does have a temporary negative effect on someone's credit, it is no where near as bad as bankruptcy. Settlement is not made a public record like bankruptcy.

A debtor can look forward to saving themselves in the ballpark of 50% of what the debt was originally. And look to have themselves become freed from the prison of debt within a matter of 2-3 years for some much sooner. Making credit card debt settlement a much more attractive offer than a Chapter 13 bankruptcy.

The truth is in many situations people will end up saving more money with debt settlement, is almost reason enough. But then toss in the fact that it will take at most three years. When compared to a 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 of course the issue of the credit report, debt settlement comes off as being a lot less negative than bankruptcy.

There are three ways in which one can settle the debts they owe. One is they can do it themselves, which is to a great extent advised against if you do not know what you are doing. Then a debt settlement company can be hired to assist in settling someone's debts. There are many good 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 lawyer as well. You can get more security retaining a law firm, and usually they can negotiate lower settlements as well. And being that lawyers must be accredited members of their States Bar Association you get the extra protection in knowing that they must report to a higher authority. There are far less unscrupulous establishments that are law firms then debt settlement companies.