OIC

Many debt relief laws have been in existence in the economy since the past few decades and new ones introduced in the recent years in order to deal with the ongoing economic crisis. These relief laws are particularly aimed at eliminating the unsecured debt burden of the average American consumers so that they can be effectively discouraged from declaring bankruptcy.

The debt relief laws are not intended to directly pay off individual debts. They instead make methods of debt relief like the debt negotiation process OIC more appealing to the consumers and the creditors alike. Declaration of bankruptcy has never really helped either of the two parties. Therefore, facing threats of bankruptcy from the consumer makes the debt negotiation process seem more favorable to the creditors.

The stimulus package allows a variety of tax cuts to the creditors on unpaid debts and discounted debt amount. So, if there is a case of non payment, the creditors will not suffer complete loss, instead they will benefit from the tax relaxation granted by the government. To follow it up if they negotiate with the debtors to get back even a fraction of their money, they will enjoy profit.

The tax cuts encouraged by the stimulus package in favor of the consumers have also helped to a considerable extent in eliminating the risk of bankruptcy. For example, 95% of workers will see a tax cut of $500 for single workers and $1000 for couples. This amount saved, because of the tax cuts, can be used to pay off debts in small installments, in which case both the debtors and the creditors will be benefited.

Since credit cards have been the major cause for debt in the economy, many old laws have been amended and new ones have been implemented to deal with this issue. The Credit Card Accountability Responsibility and Disclosure Act of 2009 can be mentioned in this respect. Although, the credibility of this act is debatable, it has provided relief to many.

The consumer credit Act of 1974 has also been amended to make it more suitable for the present economic conditions. It is advisable for all consumers to gain information on the FDCPA (Fair Debt Collection Practices Act) and the federal rights of the consumers guaranteed under it. There are a few very effective laws that protect the consumers from the harassment of collection agencies also.

It can therefore be seen that the debt relief laws indirectly favor the negotiation and settlement procedure. All these laws along with the stimulus package have been effective in giving the negotiation process an upper hand as opposed to bankruptcy.