US economy saw a wave of financial reforms after the economy was hit by a deadly recession. Thousands of people lost their jobs because of the recession and this caused a lot for them. They failed to meet their financial obligations and they failed to repay their debts. This made them defaulters and they eventually filed for bankruptcy. This made them suffer because they lost their credibility and also they failed to get any further credit from the creditors for the next 7-10 years. This happened because the report of bankruptcy filing continued to show up on the credit history for that period of time.
The creditor on the other hand lost their liquidity and they faced problems because of the fact that they failed to manage their costs. The main problem that the creditors faced is that they lost their financial equilibrium. The debt settlement consumer protection act came to rescue of both t he creditors and the consumers. The creditors enjoyed the benefits of stimulus cash and tax breaks. This step was taken by the govt. to make the creditors open up for the debt settlement deals. If the creditors agreed for settlement deals, they will get back at least a part of the money that they give to the consumers. The loss that they bear is covered by the stimulus cash in the economy and the reduction in the amount of taxes that they pay.
As the creditors opened up for the settlement deals, the consumers now began to get advantage. They can now get rid of the unsecured debts that they have. Once a creditor agree for a settlement deal, a certain part of the debt that a consumer has is wiped out. The consumer now needs to repay only a part of the debt that he or she has. This helped the consumers to get back the financial equilibrium and they managed to fulfill their financial obligations. The overall economic scenario became good and the economy gained stability. This is how the financial reforms in form of debt settlement consumer protection act help the consumers to get out of the mounting credit debts.
Source by Percy Wilson