Getting a loan is always a matter of good financial planning. If you choose to go for a loan without planning, you shall eventually face financial hurdles, and that can potentially cause the heavy burden of debt. The same can be stated for credit card purchases. You may have a good credit limit, but that does not mean that your expenses are supposed to be unplanned with a credit card. Even you cannot make small expenses through a credit card without having a proper repayment plan. It is to be remembered that not paying bills on time leads to distrust among the credit reporting agencies. Eventually, your credit score will come down.
Once the credit score is down, it would take a lot of time to repair the score. For that reason, you should be careful with your measures. If you feel that you have made some unplanned purchases through your credit card, it is the time to think about the debt consolidation process. In most of the states of the USA, lenders rights have been protected by the law or regulations. There is no way of escaping the payment of the loan repayment premiums or credit card bills. This is why debt consolidation is required. It is a process that helps you to deal with the burden of debt in a more tactful way.
Laws for debt relief
A drowning man would definitely try to swim out of the water even he does not know swimming. The same situation can be imagined in the case of the persons who are facing the burden of heavy debt. When it comes to discussing debt relief, people seeking such things should be aware of two laws. These laws are known as TSR and FDCPA. In the following section, these two laws shall be discussed in details. It is important to know about these laws as that will help you to make more accurate planning for debt consolidation. You can learn more from this about the laws of debt relief in details from the professionals.
All about FDCPA
FDCPA is the acronym of Fair Debt Collection Protection Act. It is known to all that in the USA different states have different legal provisions. The basic framework is the same everywhere, though legal details may vary. Rules and regulations may be drastically different, and that is why understanding the law of your state particularly is important. It is not possible to discuss the law of every state here. There are certain changes to FDCPA, as per the states. In the following section, the basic things are discussed, and these things are more or less common in every state of the USA. Here are things that you should learn about FDCPA.
- Even though you owe money to the creditor, this act ensures that you are treated properly. No physical threats can be given to the borrower in case if he cannot repay the loan premium on time.
- When you fail to pay credit card bills on time, you shall find that the credit card provider will try to contact you and ask you to make the payment at the earliest. Not paying the bills on time would add some penalties as well. However, the penalty should not be random. When you are handed the credit card, the provider should make a contract with you to make you understand the fact that failing in paying the bills on time will attract certain penalties.
- When credit card companies get fed up in asking you for payment of the bills, they generally hire the money recovering companies. These are third party companies which deal with the
- money recovery process. When you do not pay a bill of your credit card even after repeated asking, the money has been considered as bad debt. In order to recover this money, lenders hire third-party recovery agency. The recovery agency should be transparent to the lenders. They should not make any mischievous attempts for money recovery.
- In case of some disputes on the bills, you always have the option to negotiate with the credit card agency or even a recovery agency. In many cases, recovery agencies do not impose any late fine; they just want clients to make the upfront due payment at the earliest.
- In many cases, people get false bills from credit card companies, though it rarely happens. But, when it comes to buying some products or services, people often get cheated. In such a scenario, you have the right to deny the payment. The payment seeker may go to the bad debt collection agency, but that should not bother you, as long as you have proof and documents of being cheated or wrongly billed by Credit Card Company.
- When the due amount is high, you can talk to the recovery agency and ask for some discounts or relief. If not discounted, you shall get the scheme to pay your bills easily in a few installments. There could be monthly or bi-monthly installments.
- No ill behavior should be tolerated against the borrower and his or her associated as well as family members. Under the law, this is completely prohibited and considered as malpractice.
All about TSR
Like FDCPA, you need to know about TSR, which is another law that is related to debt settlement. This law will protect consumers from the malpractices and false commitments of the services that claim to provide overnight debt consolidation service. According to this legal framework, such companies cannot do the following things.
- The companies cannot demand upfront payment without giving their services. It can ask for small advanced payment, but not the full payment in advance.
- There should not be any false commitments or promises from such services. Realistic and lawful advice is required to be suggested.
- Time should be mentioned for debt settlement, though time is not a constant thing. Sometimes, it may take more time than assured to clients and in that case, services should inform the situation to the service seekers.
Debt settlement is the most important thing for modern businesses these days. If the process is not followed properly, people can face deep financial crunches. Knowing debt consolidation and understanding the relevant laws is important.