Know about the FTC regulations on settling credit card debt
- By: Evan Parker
Millions of cardholders in the US find themselves crushed under the over burden of their debts. Irresponsible use of cards, urgent medical expenses and job loss are the real reasons behind their plight. Regardless of how you get into debt, it is crucial to know the way to expunge your existing debts.
Few guidelines have been enforced by the Federal Trade Commission (FTC) before settling your credit card debt. There is no guarantee that the settlement companies can settle your debt and lower it from 30% to 70% of the total debt. So, the FTC prohibits the company from taking any up front fee from the clients until they manage to settle a considerable portion of the owed amount. This new rule enforced by the FTC due to rising of the scam company.
Know how you safeguard yourself from debt settlement scams:
Know about the regulations laid down by the FTC to safeguard the consumers against a debt settlement company which:
1) Claims that it offer a 'new government program' to help you eradicate your debt as there is no such government program.
2) Guarantees to wipe out your debts overnight
3) Assures you to put an end to all debt collection calls and lawsuits
5) Asks you to pay the service charges within the few initial months of its services.
Tips to follow when you have overwhelming debt:
The FTC suggests the following tips which one should keep in mind to avoid the association with a scam debt settlement company.
1) Approach your credit card company: You can directly approach your credit card company before hiring the services of debt settlement company. If you have a good payment record then the credit card company will accept your settlement proposal. You need to convince the company to lower the principal balance.
2) Consult a credit counselor: The credit counseling organizations will help the people to manage their debts and guide you to formulate a budget. There is a toll-free phone number on the credit card statement that will help the consumers find a credit counseling agencies.
3) Consider filing for bankruptcy: If you have no other debt relief option then you can file bankruptcy but your credit score might drop. The FTC recommends filing a Chapter 13 bankruptcy. You can easily retain your mortgaged house if you have a steady income but if you file a chapter 7 bankruptcy then you might lose possession over your property.
Make sure that you do not get associated with a scam company. You should be aware of the guidelines enforced by the FTC then you can avoid the fraud company. Before you hire the services of a debt relief company you should know that the company is accredited by the Better Business Bureau (BBB). This will ensure that the company you are working with is a genuine company. You can settle your debt easily if you are associated with an authentic debt settlement company.
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I am a content writer with darngoodblogging.com. I write on financial topics including bankruptcy, business, FTC,credit card(http://darngoodblogging.com/debt-relief-options-for-credit-card-debt/) etc.