Debt Settlement Consumer Protection Act - What it Really Means For Credit Card Companies
Debt settlement consumer protection act means a lot for the consumers because it helps the consumers to wipe out a certain percentage of the debt that the consumers have. But what it really means for the credit card companies? Well, this article tries to explain that to you. The only thing that you need to keep in mind is that the debt settlement consumer protection act helps both the consumers and the creditors.
After the US economy was taken down by the recession, the economic experts in the Federal govt. found out that the economy was further rolling back into the recession because of the increased number of bankruptcy filing. This was triggered by the loss of job due to recession. As the consumers lost job, they failed to repay the creditors and thus filed for bankruptcy. Once the consumers file for bankruptcy, the creditors lose because of the fact that they lose their liquidity. Once they lose their liquidity, they fail to cover their organizational costs and because of this reason, they become unstable and lose their financial equilibrium.
As a part of the debt settlement consumer protection act, the govt. introduced tax breaks for the consumers and also released stimulus money into the economy. The creditors who agreed for the settlement deals were allowed to use the stimulus money. This was because of the fact that the creditors when agreed for settlement deals lost a part of the money that they gave to the consumers. The stimulus cash helped them to cover up the loss and they could use this money to cover up the costs that they have. Additionally, to give further relief to the creditors, the govt. also decreased the amount of the taxes that they need to pay. This helped the creditors to regain stability and financial equilibrium. Thus the creditors enjoyed some benefits which helped them to become more open for settlement deals and this pulled the economy out of recession. This is what the debt settlement consumer protection act means for the credit card companies.
