In 2005 there was a restructuring in the bankruptcy legislation. The change in the law has made it much more difficult for a consumer to qualify for Chapter 7. A Chapter 7 will discharge the debt owed in it's entirety. If a consumer does not pass the "means test" to be excepted for Chapter 7 then they will have to file a Chapter 13. A Chapter 13 is a court dictated settlement process. In which the court determines what you will pay back to whomever you owe the debts for a five year period, by analyzing your finances in great detail.

So clearly a Chapter 13 is not as lucrative of an offer as a 7. This drives the majority of debtors away from filing bankruptcy to look for alternative 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 process in which one must default on their unsecured debts' while saving up the necessary cash on the side, to then negotiate a one time settlement, at a much lowered sum from the balance owed. While debt settlement does have a temporary 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 look forward to saving themselves around 50% of what the debt was originally. And look to have themselves become debt free within a matter of 2-3 years for some much sooner. Which makes credit card debt settlement a much more attractive offer than a Chapter 13 bankruptcy.

The fact that in many situations debtors will save more money with debt settlement, is almost reason enough. But then throw in the fact that it will take at most 3 years. When compared to a bankruptcy that will take five. Plus settlement being a private issue and not a publicly known 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 better than bankruptcy.

There are three ways that a debtor can go about settling their debts. First off you can do it yourself, which is greatly advised against if you do not know how to negotiate properly. If someone cant do it themselves then a debt settlement company can be hired to assist in settling someone's debts. There are many ethical debt settlement companies however one must do research on a company to ensure they are reputable and honest. Then you can contact a debt settlement attorney as well. You can get more protection using a law firm, and the majority of the time they can work out lower settlements as well. And being that attorneys must be active 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 organizations that are law firms then debt settlement companies.

Joe Rodgers is a debt analyst and research assistant with the US Consumer Advocate, which primarily practices in credit card debt relief.