Credit Card Debt Relief Act 2010

Many Americans are struggling with out of control credit card debt. As a result, several debt relief options have been introduced to the market including debt consolidation, debt settlement, and credit counseling. The Federal Trade Commission  (FTC) recently passed provisions regulating the credit card debt relief industry, mainly targeting for-profit debt settlement companies. Many of these companies promised they could help consumers “cut credit card debt in half”. The problem was, however, that there was no guarantee for consumers, many of which had to pay large upfront fees to the debt settlement companies. Too many of these companies, instead of leaving consumers better off, push them deeper into debt, even bankruptcy.

The Credit Card Debt Relief Act 2010 prevents settlement companies from charging heavy fees even before the completion of the deal. This legislation is intended to provide significant protection for consumers who enter into a debt relief program and stop deceptive and abusive practices by debt relief providers that have targeted consumers in financial distress.

The purpose of the Act is to give consumers with over $10,000 in unsecured debt, who are facing financial hardship, a real and legitimate option for achieving debt relief. Since creditors and card issuers receive nothing in a bankruptcy filing, they are eager to work with genuine debt settlement companies to collect at least some of their money back.

Other provisions of the Act require settlement companies to specify to the defaulter exactly how long the total process will take and also the cost in such a circumstance. Moreover, the borrower can, at any point in time, choose not to continue with the program and in such a case, all his or her funds have to be refunded. The FTC debt settlement provisions also make it mandatory for the companies to inform the concerned customer about the negative effects, if any, of going for such a program.

Will these new regulations put legitimate debt management companies out of business along with the abusive, deceptive, and unfair debt companies? It’s very possible that this Act will have a detrimental effect on consumers, leaving many of them to resort to bankruptcy instead of debt management. Although the intention of the FTC is to protect consumers, it’s yet to be seen if the Credit Card Debt Relief Act will achieve the Commission’s desired result.

DMCC is a 501 (c)3 nonprofit organization committed to educating consumers on financial issues and providing personal assistance to consumers who have become overextended with debt.  Education is provided free of charge to consumers, as well as personal counseling to identify the best options for the repayment of their debt. To speak to a certified credit counselor, call toll-free 866-618-3328 or email

Advice For Dealing With Creditors

At one time or another, all of us have forgotten to pay a bill or fallen behind on payments to credit cards, mortgages, autos, medical bills, or other situations involving bills. We have all therefore been contacted by a bill collector, ether through the mail or telephone call.  Some these calls and correspondence can become a terror attack from creditors.  Some creditors call at all hours at home and work. Some even may call the neighbors, the family, and/or employers.  Some collectors can be obnoxious, condescending and downright rude.  Despite laws governing their actions, many creditors and collection companies feel that an individual will not have the time, money or emotional strength to pursue them in court.  Therefore, they get away with the outrageous and, sometimes, illegal acts.

If you have filed bankruptcy, and received an automatic stay, it is against the law for the creditor or his collection company to contact you without permission of the Bankruptcy Court. If your case is discharged, then creditors and their collection companies are permanently barred from contacting you unless they have received special permission from the Bankruptcy Court, or your debt is one that is excepted from your discharge.

If you have entered into debt consolidation or debt settlement with a non-profit debt counseling service, make sure you know your rights for protection from creditor calls from your representative.

You have other legal rights which protect you against certain collection practices.  First, you should know what to do when you start getting bills. If you feel you do not owe the debt, or the amount the bill collector is claiming is incorrect, you should write a letter to both the collection company and the original creditor stating you do not agree you owe the money, or that the amount owed is incorrect. You should also ask for a record of your payments.

If the bill collectors report the debt to a credit reporting agency, you should write to the credit reporting agency and tell them the bill is in dispute. Whenever you write to a bill collector or to the reporting agency, you should sign the letter, date it, and keep a copy for your own file. Remember, just calling the bill collector to say you do not owe the money may not leave a permanent record of the call. Like most bureaucracies, if it is not in writing, it does not exist.

You can stop annoying collection. If the collectors continue to call you, you can send them a letter requesting they cease communication with you under the terms of the Fair Credit Collection Practices Act, 15 U.S.C.S. Section 1692. When you write your letter, do not forget to date it, sign it, and keep a copy. If you really want them to pay attention, send the letter CERTIFIED.    By sending the letter CERTIFIED, you have proof that you sent the letter. If you send this letter, it will not only stop letters to you, but will also stop telephone calls to you.

Also, The Fair Credit Collection Practices Act forbids bill collectors from calling you at inconvenient times, such as before 8:00 a.m. or after 9:00 p.m..    The collectors or agents cannot communicate with third parties such as your neighbor, your friend, or your family members. They cannot contact you at work if they know (notice must be in writing) that your employer prohibits it.  They cannot threaten you with criminal prosecution or call you on the phone repeatedly with the intention of harassing you.

Document all your discussions and communications with any debt collectors. If the collection company continues to ignore your warnings and refuses to comply with the law then you could sue them.  But their behavior must be truly offensive, not just annoying.  You could bring an action in small claims court, or hire a lawyer.  But, you must have proof of their actions in order for any court to find in your favor.

DMCC is a 501 (c)3 nonprofit organization committed to educating consumers on financial issues and providing personal assistance to consumers who have become overextended with debt.  Education is provided free of charge to consumers, as well as personal counseling to identify the best options for the repayment of their debt. To speak to a certified credit counselor, call toll-free 866-618-3328 or email

Finding A Credit Counselor

Reputable credit counseling organizations advise people on managing money, bills and debts, help them develop a budget, and usually offer information and workshops. They should evaluate your entire financial situation with you, and help you develop a personalized plan to get you on the right track. Debt consolidation, debt settlement and credit counseling are often better options than bankruptcy. Input from a trained professional can help guide you in the best direction for your individual situation.

Finding reputable credit counselors has become more convenient. New laws requires credit card issuers to include a toll-free number on their statements that directs cardholders to information about finding nonprofit counseling agencies.

Most credit counselors offer services through local offices, the Internet, or on the telephone. If possible, look for nonprofit credit counseling programs. Just as with any other venture, the more educated you become, the better choices you will make for yourself and  your finances.

Start Fresh After Bankruptcy

Getting back on your feet following bankruptcy can be a very difficult task. You’ll be starting from scratch. It’s critical to your future financial success to make sure you don’t make the same mistakes .

To ensure you make a “fresh” start, you need to think and analyze your previous spending habits. What really lead you to go bankrupt? Analyze your expenses, the way you handle your money and of course your lifestyle. Do you have to live a lavish lifestyle? And the major question is can you afford that kind of living? What are your major purchases recently? Asses your situation, and the causes that made you experience bankruptcy.

After that, make a plan on how recover and live without going into a financial difficulty. The primary thing that you have to do is to reestablish your credibility, especially to financial institutions. You must regain a good financial standing status. Start to build up resources. Save your money and put it to good use. Don’t splurge on extravagant items. Keep in mind what drove you to bankruptcy, your too much spending attitude. You have to change the way you regard your expenses.

If you use a credit card, be sure to pay on time, in full. Make sure also that when using credit cards, it’s for emergency purposes and not for luxurious items. Keep only one or two credit cards. A lot of credit cards may lead to temptation. You don’t want to end up into the same situation again. Having a savings account is also a good option because it means less reliance on your credit card purchases. You’ll learn how to set aside cash in your account for large purchases.

Budgeting is also very important because it teaches you on how to manage your money. Stick to your budget!.

Some lenders are willing to offer housing loans to people who have declared bankruptcy. If you find a financial company to hold your home mortgage, make sure you pay them promptly. Prove to them that you’re worth their risk.

Bankruptcy can bring stress to your life, but there is a lesson to be learned. You’ll know now how to deal with your monthly expenditures. Your spending habits will change for the better and you’ll live a life without worries. Keep in mind, it’s fine to have debts as long as you know how to manage your resources and pay your creditors.