Credit card debt can be overwhelming and debilitating, but working your way out of large credit card balances can be the best thing you do for yourself. Before beginning the process, it is important to know consumers are protected from unethical companies who prey on desperate people seeking debt relief. The federal government has passed laws to protect consumers and you must understand your rights under the Credit Card Debt Relief Act.
What is the Credit Card Debt Relief Act?
The Federal Trade Commission passed the Credit Card Debt Relief Act in 2010. This act protects consumers from predatory companies charging large fees to people seeking help with debt issues. Consumers with over $10,000 in unsecured debt who are facing significant financial hardship can qualify for the large majority of debt settlement programs.
Under the Act, debt settlement companies can only charge fees after they have successfully settled your debts. Along with fee protection, the Act requires debt settlement companies to explain to the consumer exactly the cost and length of time the debt settlement will take. The settlement company also has to disclose any potential negative effects to the consumer before the start of the process. Additional protections include the consumer’s right to stop the program at any point and have their invested funds returned.
How to Pursue Credit Card Debt Relief?
Professional Assistance: You can pursue credit card debt relief through credit card debt relief companies such as Freedom Debt Relief These companies will help you settle your credit card debt for a lump sum that is less than the full amount you owe. The company will guide you on ways to save a specific amount each month to pay off the settlement amount. Be a savvy consumer and research companies before signing.
There are multiple research resources available to consumers, including reports by local and state consumer protection agencies. The debt settlement process works if started by the correct company. Remember, the debt settlement company must tell you the price and terms of your agreement, how long the process will take, and any negative consequences to the debt relief process before you begin any program.
DIY Negotiations:There are other ways to pursue credit card debt relief. You can contact your credit card companies and try to negotiate your settlement. The advantage of this method is no fee charged. However, if the credit card company will not negotiate with you, you have no recourse.
Balance Transfers:You may also attempt to find another credit card company with a balance transfer at a lower or even free interest rate. Usually, a consumer must have good credit to find this type of card, and the low-interest rate runs out after a certain amount of time.
Credit Counseling:Another option is to contact a credit counselor. Credit counseling agencies are often non-profits and may be offered through organizations like universities, credit unions, or branches of the federal government. Also, credit card companies must list the phone number for a resource to find credit counseling agencies on their credit card statements.
Bankruptcy Protection: Filing for bankruptcy is an option for credit card debt relief. However, bankruptcy has serious financial consequences. Bankruptcy information will remain on your credit report for 10 years and may decrease your ability to get credit in the future.
This negative impact can include difficulty buying a home or other product or even negatively impacting employment opportunities. There are also fees for filing bankruptcy, and you must hire a lawyer to assist you through the process. Bankruptcy is usually a last resort.
From this information, you can see there is a way out of crushing credit card debt. It can be advantageous to both the consumer and the credit card companies to reach an acceptable debt settlement. Understanding your rights under the Credit Card Debt Relief Act is one way to give you the confidence to start rebuilding your finances Taking control of your debt is empowering and will be the start of a positive change in your financial future.