The Credit Debt Settlement Act of 2010 was recently passed by the US FTC. These federal laws prohibit debt relief programs from charging up-front fees, making it a much better option for consumers and small businesses. Now when you join a debt settlement program, you won’t have to pay a dime until your balance is paid off.

This federal legislation, which took effect on October 27, 2010, goes a long way to making debt relief a real possibility for consumers and small businesses. Now consumers who enter such a program will be at far less risk as they will not be responsible for paying until they actually see real results and their debt balance is paid off.

Typically, the average minimum return a debt settlement company must adhere to is 35%. So if you get into a settlement program and the company can’t wipe out at least 35% of your balance, you won’t be responsible for paying them a penny. Therefore, if you have a credit card balance of $40,000 and the settlement company is unable to remove $14,000, you will not be responsible for paying them a fee.

The Credit Debt Settlement Act of 2010 has shut down all suspected debt relief companies. They know they can’t stay in business without collecting fees up front. However, legitimate companies will be confident enough to collect their fee on the backend after the debt balance is paid off. Businesses with a proven track record will ultimately benefit from this legislation and continue to provide a legitimate service to consumers experiencing financial hardship.