The main reason of falling in debts is being out of employment.
When there is no source of earnings, people start to depend on the money borrowed by the financial cells and they meet up their expenses by using this money.
Mostly the people are using the credit cards for their financial uses but high rate of interest on the credit cards has increased their burden.
People face problems when they remain under debts for a long period of time.
Therefore, people start to look for ways of the debt settlement.
They think that bankruptcy is a more rapid process of getting freedom from debts.
Due to this feature, many people adopted this process but they did not take into account its negative features such as its attack on the credit score.
There is another disadvantage of bankruptcy which is that according to the chapter 7 of bankruptcy, debts will be paid by liquidating the assets of the debtor but mostly people don't want to lose their assets.
Due to the high rate of interests charged by the credit card companies, people have become unable to pay their debts in full.
For these problems, a solution is provided by the U.
S President Obama in the form of the consumer protection act.
This act is very helpful for the debtors but there is a need to tell the people about the effective laws provided in this act.
These laws support the debtors by protecting them financially as they are not allowed to pay the service charges in advance or before enjoying the services provided by the settling agency.
These laws also give the right to the debtors of paying some part of their net debts instead of paying the debts in full after the settlements with the creditor.
So according to the rules defined in this act, a settling company should make its best for reducing the liabilities for its client.
A Settlement company has no right to demand any charges from the debtor before providing the desired services.