Credit card debt settlement programs became very popular in the United States after the new bankruptcy laws were passed in 2005.
This used to be a very risky option for debt relief but not anymore.
On October 27th 2010, new federal laws were passed that make debt settlement a much less risky option for getting out of credit card debt.
Now consumers and small businesses that enter into a credit card debt settlement program will not have to pay upfront fees.
With the new federal laws in place, these companies can only collect a fee when they reach a successful settlement deal and eliminate at least 35% of your debt balance.
Therefore the risk has been transferred from the consumer to the debt relief company.
They don't perform, you don't pay.
Only consumers and small businesses that are experiencing a financial hardship will qualify for these settlement programs.
You also must have at least $10,000 in unsecured debt to qualify.
Unsecured debt includes things like credit card bills, medical bills, store cards, and anything else that doesn't have a secured asset backing it up.
Creditors of unsecured debt know that if you were to file bankruptcy they would likely receive little to none of their money back.
Knowing this, if they believe you are a legitimate candidate for bankruptcy they will be more than willing to negotiate and collect at least some of their money back.
Most credit card debt settlement programs can eliminate 40-60% of your balance on average if you are a qualified candidate.