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 contact@dmcconline.org. DMCC is located at 3310 N. Federal Highway, Lighthouse Point, FL 33064.

Should You Refinance?

Interest rates have fallen so much, it may seem like a no brainer to refinance your home mortgage.

The decision to refinance your mortgage isn’t one that should be taken lightly. Before deciding, you need to understand all that refinancing involves. Your home may be your most valuable financial asset, so you want to be careful when choosing a lender or broker and specific mortgage terms. Remember that, along with the potential benefits to refinancing, the interest rate isn’t the only thing to consider when shopping for a new loan. Refinancing, after all, isn’t free. There are the bank fees, the bills for a new appraisal and inspection, your lawyer’s fee, etc.

When you refinance, you pay off your existing mortgage and create a new one. You may even decide to combine both a primary mortgage and a second mortgage into a new loan. Refinancing may remind you of what you went through in obtaining your original mortgage, since you may encounter many of the same procedures–and the same types of costs–the second time around. It requires an application, credit check, new survey and title search, as well as an appraisal and inspection fees. As you know, this process can be quite lengthy and expensive.

Age is another consideration. Carrying a mortgage into retirement has traditionally been viewed as a bad idea – ideally, you should be as debt-free as possible when your income stops.

As a rule of thumb, it pays to refinance if you can get an interest rate at least two percentage points lower than what you are currently paying. However, every situation is different. Make sure to carefully weigh the benefits against the costs to make the best choice for your situation.

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 contact@dmcconline.org. DMCC is located at 3310 N. Federal Highway, Lighthouse Point, FL 33064.