Know about the consumer credit card debt relief law

Millions of consumers in the US have default on their payment after the economic depression in the US. In such situation, they have no other alternative than to enroll in a debt relief program. It is calculated that an average American household carries $10,000. But with the passing of the phase the amount of debt is spiraling out of control. As people rely on debt relief programs therefore there is a mushrooming growth in these types of companies. But there is an incessant growth in the scam companies and these companies are taking advantage of the vulnerable debtors. Therefore, the Federal Trade Commission has implemented new consumer credit card debt-relief rule to protect the consumers from the scam companies.

Know about the debt relief options:
There are three feasible credit card debt relief options that people generally opt for: credit counseling services, debt management plans and debt settlement programs. A genuine credit counseling agency can help you review your financial situation and suggest you solution for the problem. The proficient counselor of the agency will formulate a budget plan for you so that you can pay off your debts effortlessly. Make sure that the counseling agency is associated with the National Foundation for Credit Counseling. The counselor will prepare a debt management plan for you according to your financial situation. In a settlement program the credit skilled debt arbitrators will negotiate with the creditors to lower the outstanding balance to make it affordable to pay off.

Know about debt settlement program:
The FTC has implemented a new consumer credit card debt relief rule because of the debt settlement program. Many debt settlement companies claim to lower the debt by 50% to 70% that the debtor originally owes to the creditors. Some companies even take upfront fee from their clients without settling their debts. These companies recommend their clients to stop making payment to their creditors so that they can negotiate with the creditors. But the creditors might agree to settle debt but if you stop making payment then it might damage your credit report. Accruing late fees and interest on the principal balance will make it unaffordable to pay off.

Know about the fee structure:
The FTC has imposed new rule that prohibits debt relief companies to take upfront fee. The companies before charging their clients are required to renegotiate, reduce or settle at least one of a consumer’s debts. Make sure your company provides a written document of the settlement agreement or payment plan and takes you consent. The company cannot collect fee as long as you don’t make a single payment according to the written agreement.

Know about the disclosure Rules:
The debt relief companies are required to provide the disclosure information as it has been made mandatory by the FTC. This information should be inclusive of the price and terms before the company negotiate with the creditors. The company is required to reveal the consequences to their clients for instance your credit score will be lowered and the forgiven debt will treated as taxable income