Consumer debt is the subject of some complex laws, covering topics such as fair debt collections practices, credit repair organizations, repossessions, overdraft protection, and more. These laws are intended to protect consumers from harassment and unscrupulous collection practices, while still allowing creditors to collect what is owed.
Ultimately, consumers may find themselves in a position where it is necessary to file for Bankruptcy, which is a legal process that permits insolvent people or businesses to wipe out their debts and start fresh. Bankruptcy proceedings are governed by federal law and take place in the U.S. Bankruptcy Court. A bankruptcy stays on an individual’s credit rating for up to 10 years, and some debts, such as child support, taxes, and student loans, normally cannot be discharged.