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The Credit Card Debt Law Is Working For You

April 23, 2012 | Comments: 0 | Views: 133

Thinking about either joining a credit card debt relief program or filing for bankruptcy? Are the legal implications of your actions causing you some degree of concern? After all, possessing a debt problem is bad enough without having to think about lawsuits over missed credit card repayments. Thankfully, recent changes in credit card debt law legislation provide some measure of protection for all participants of credit card debt settlement programs.

Court cases over our unpaid debts and the possibility of enforced payments, even repossession of possessions, are on the cards for you if you manage the debt reduction process badly. While bankruptcy has its own inbuilt protection, because it is handled by the courts, until recently credit debt settlement has been a legal quagmire.

Recent Changes to the Credit Card Debt Law

In 2010 the Federal Trade Commission (FTC) made substantial changes to the law, which counters the unethical practices of some debt settlement companies. Due to the turn down in the global economy in recent years, a record number of debtors have applied for credit card debt settlement. While many debt relief companies have handled these cases in an ethical manner, some companies had been charging excessive upfront fees and monthly servicing fees while providing the credit card debtor with either very poor debt settlements or no debt settlement at all.

Those unfortunate debtors now found themselves worse off than when they started the plan, because their debts had increased due to the interest which had been gathering on their unpaid cards. This, combined with the fees paid to these debt relief companies, resulted in a great many complaints made to the FTC. The FTC listened to these complaints and made the substantial changes to the law, which results in a remarkable level of financial security and legal protection for all participants of debt settlement plans in the USA.

In brief summary it basically states the following:

• The debtor pays into a special account which is owned and managed by the debtor. The debtor can withdraw the balance at any stage. Consequently, the debt settlement company has no control of the debtor's finances.

• The debt relief company has to deliver significant reduction (or at least changes in the level of debt in at least one of their client's credit cards prior to charging the client for their services).

• The debt relief company can only charge their client a fee after the debtor makes at least one payment to the credit card company, which the debt relief company has settled the debt with on behalf of the debtor.

• The company can only charge a fee which is proportionate to the amount of debt savings which they have settled on behalf of the debtor.

Debt problems are bad enough without having to face court cases, and yet for many credit card debtors this is what they have to face up to on a daily basis. If you find yourself in this position, what can you do next? If your debts are getting badly out of control, you may well be considering the debt relief route and comparing it against bankruptcy.

Although debt settlement cannot be presumed to be a better option than bankruptcy, at least now if you are thinking of taking this up there is some degree of legal reassurance. These recent changes to the credit card debt law mean that if you sign up for a program, your money will be protected during the entire process and that the company can only receive their fee once you have received substantial savings on your outstanding debts.

While nobody wants to be embroiled in a debt relief process, at least now you know that you are protected thanks to the recent changes in credit card debt law.

By learning more about the credit card debt law you are allowing yourself the opportunity to pull yourself out of debt and reclaim your life back. That's what is all about. Education is the key here, not another loan to pay off the old loan.

Source: EzineArticles
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