subject: Credit Card Debt Law Get The Law Working For You [print this page] If you are considering a credit card debt settlement plan, you may well be wondering about the legal implications of your actions. After all, possessing a debt problem is bad enough without having to cater for lawsuits over unpaid credit card bills. Fortunately, recent changes in credit card debt law provide some degree of protection for participants of credit card debt settlement programs.
Court cases can result in enforced payments; even repossession of some of your belongings could be on the cards for you if you manage the debt settlement process badly. While bankruptcy has its own inbuilt safety measures, because it is coordinated by the courts, however, until recently, credit debt settlement has been a legal minefield.
The Outcome of Recent Changes to the Credit Card Debt Law
In 2010, the Federal Trade Commission (FTC) made important changes to the credit card debt law, which protects the public from the unethical practices of some credit card debt settlement companies. Due to the economic turndown in recent years, a record number of credit card debtors have applied for credit card debt settlement. While many debt relief organizations have handled these debtors in an ethical manner, some companies had been charging excessive upfront fees and monthly servicing fees, while delivering their clients with either very poor debt reductions or no credit card debt reductions at all.
Their unfortunate clients actually found themselves worse off than when they started the reduction plan, because their debts had increased due to the interest which had been gathering on their debts. Combined with the fees paid to these organizations this resulted in complaints being made to the FTC. Following on from this, the Federal Trade Commission made the following changes to the credit card debt law:
The credit card debtor pays into a special account which is owned and managed by them. The debtor can withdraw the balance at any time. This means that the debt settlement company has no control of the debtors finances.
The credit card debt relief company has to deliver significant reduction in debts for at least one of their clients outstanding credit cards.
The credit card debt relief company can only charge their client a fee after the debtor makes at least one payment to the one of their outstanding credit cards.
The debt relief organization can only charge a fee which is proportionate to the amount of debt savings which they have brought about for their client.
Debt problems are bad enough without having to attend court cases. Yet for many debtors, this is their day to day reality.
If you are finding yourself in this position, what should you do next? If your debts are out of control, you may well be considering the debt settlement route. These recent changes to the credit card debt law mean that if you sign up for a credit debt settlement program, your money will be protected during the entire process. Also the credit card debt settlement company can only charge their fee once you have received substantial savings on at least one of your outstanding debts.
While we would all like to be free from the necessity of joining a credit card debt settlement process, at least now you know that if you have to join one that you are protected thanks to the recent changes in credit card debt law.
