The temptation of getting into the runaway housing market is understandable. Simple savings accounts are returning less than 2% per year. Cds and bonds are not much better. “Safe” funds are yielding 5% pre-tax. And real estate is surging, offering both equity appreciation and tax protection iva. However, if you are in debt, it’s important to make sure you restructure it and consolidate it before taking the leap into the housing market.

So many see the risk of taking on a house that is beyond their means as worth taking in order to create value and build a financially secure future. The problem is that the lenders, once predominantly banks prone to conservative lending standards, now include pension funds, insurance companies and other investment entities eager to place loans to keep their money working.

It is not the lenders who will be hurt. They will move swiftly to foreclosure, recover the house, and resell it. It is the borrower who gets burned. Bankruptcy laws are changing in October and it will no longer be convenient to file bankruptcy to avoid creditors. Individuals, once protected from forced liquidations, will find that to be the norm rather than the exception. So it is more important than ever to learn how to renegotiate or restructure debt before one is forced into bankruptcy court.

Renegotiating debt is best done before you are too delinquent. With a solid payment history with your lenders you are more likely to find them willing to work with you when you approach them. Debt can be restructured a number of ways but there are some cardinal rules to observe so that you preserve your ability to control the restructuring of your debt.

Do not wait until the debt has been turned over to a collection agency. By then it is too late to deal with the original issuers of the debt who might have an interest in helping you. They have discounted and sold off your debt when it is turned over to collections. That means they have written off what they would have conceded to you to a third party. The third party’s only motivation is to make money off your bad situation.

Over the past decade, debt settlement has become an extremely popular method of debt relief. However, due to rampant fraud, new FTC regulations, and shortcomings in the negotiation process, it has lost many of the benefits that once made it so advantageous to indebted consumers. Now, it appears that an emerging debt relief option will finally put debt settlement to rest.

The new program that looks like it will render debt settlement obsolete is called debt restructure. It’s essentially an evolution of its predecessor. The difference is in the way the program works. Basically, debt restructure has corrected the flaws that hindered consumers from successfully completing debt settlement programs in the past. Before discussing the details of this new program, first consider the inherent problems that it had to overcome.

Apart from the bad business practices that plagued the debt settlement industry over the years, there was another major hitch in program’s viability. The problem was with the nature of the negotiation process. In this process, consumers withheld payments from their creditors until they were able to save enough money to offer a settlement. This could take anywhere from several months to many years. Obviously, creditors did not take kindly to not getting paid for such prolonged periods of time. The resulting consequence was that the creditor would often file a lawsuit against the delinquent consumer.

Creditor lawsuits became a huge problem for consumers who had almost no money to litigate on their behalf. Furthermore, the threat of lawsuit frightened many people from their enrollment before they could complete the program. For obvious reasons, this was problematic. Not only were many consumers unsuccessful due to creditor lawsuits, but their testimonials deterred many more people from enrolling in similar programs.

Debt restructure has eliminated this burden by changing the way the negotiation process of the settlement works. Under debt restructure, the prolonged period of consumer non-payment does not occur. Instead, the program utilizes a unique “debt buyer” system in which a third party agrees to purchase the outstanding debt of the client. This third party then pays the original debt owner and then becomes the new creditor. Because the original creditor is paid in such a short amount of time, they are much less prone to seek a litigious solution.

The other major benefit to debt restructure comes from the same fundamental change in the negotiation process. Since there’s no long period of non-payment, months of missed payments are not reflected on the consumer’s credit report. More importantly, clients begin paying the new creditor immediately, therefore beginning the credit repair process much more quickly.

With a significantly reduced threat of litigation and a substantially faster period of credit repair, it seems that debt restructure offers all the benefits of debt settlement — with none of the draw backs. It is clear that existing debt settlement programs must either adopt the refined mechanics of debt restructure, or face slipping into irrelevancy.