Debt Resolution Programs - A Legal Loophole That Allows Consumers to Eliminate Credit Card Debt

June 3, 2010 - PRLog -- Debt resolution programs intend to make use of the legal loopholes present in the banking system in order to help the consumers to get out of debt. So the question is, "Will debt settlement make use of a legal loophole that allows consumers to eliminate credit card debt?" The answer is a definite "YES". Debt settlement uses the threat of bankruptcy to eliminate consumer debt. The creditors are afraid of bankruptcy filing because once the borrowers successfully file for bankruptcy; they will eliminate 100% of the debt. The creditors will then lose their liquidity and will fail to cover up the costs that they have. They will incur loss. The creditors don't really want this.

Debt settlement makes use of this loophole! The professional debt settlement companies are fully aware of the fact and the expert negotiators in the companies know exactly how much to push the creditors to eliminate at least 50% of the debt that the consumers have. The negotiator advises the consumers to go delinquent and stop paying the creditors. This might be a tough decision as the debtors will start receiving harassment calls from the lenders but it is necessary to prove that the consumer is facing a financial trouble. Once the consumer stops paying, the creditor will wait for 3-4 months and then sell off the debt to a collection agency. The rate at which the debt is sold off is 20-30 cents per dollar which is extremely low.

The negotiator knows exactly when this happens and then contacts the creditor will a better deal of 40-50 cents on each dollar. At the same time the negotiator also threatens that the consumer will file for bankruptcy in case the lender refuses to agree. The creditor agrees because the deal will mean 100% ROI for the collection agency and will simultaneously mean at least 50% and up to 60% savings for the consumer. This is how the debt resolution programs make use of a legal loophole that allows consumers to eliminate credit card debt.

If you have over $10,000 in unsecured debt it may be a wise financial decision to consider a debt settlement. Due to the recession and overwhelming amount of people in debt, creditors are having no choice but to agree to debt settlement deals. To find legitimate debt reduction help in your state and get free debt advice then check out the following link. Free Debt Advice
(http://www.CreditCardDebtFighters.com)
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