There is a common perception that credit cards are bad for you, basically because there’s the risk that it’ll keep you neck deep in debt forever.
Credit card companies have been quite inventive in the way they have presented these debt inducing cards. While they look like harmless products, they represent something that boosts irresponsible spending.
Since the average household in the country is almost $16,000 in debt because of credit card spending, the Obama Administration passed numerous laws that meant to fix the problem (See The CFPB). The objective was to protect the consumers from abusive debt settlement and credit card companies, banks, lending institutions and other similar establishments that prey on the financially troubled citizen. It also offered reprieve for the companies that were not able to get their ROI from their lending investments.
Debt Settlement Consumer Protection Act
This was designed to release government funds to help companies who were hit hard by the collapsing economy.
Companies are given help and tax reprieves so they can pool in their narrow resources to keep their workers instead of sacking them to cut back on expenses.
This meant to help creditors who are suffering from the bankruptcy filings of their borrowers. During and after the recession, people lost their jobs which resulted in an increase in credit card spending. As they ran out of money, they opted to put themselves in debt as a means to survive. But since they went further into it without the hope of employment, their incapability to pay off their debts took its toll on credit card companies who suddenly were left without profits from what the money they had lent.
The government helped these companies through funding programs. But they had to accept the terms of the Credit Card Debt Settlement Act, so they could get government aid through tax credits. And the losses they suffered were replaced by the government through the “stimulus fund” that it was released to help with such transactions.
Credit Card Debt Settlement Act
This one was passed to promote the best practices to debt settlement. It stimulated credit card companies to accept more debt settlements proposed by their card holders. Since citizens are unable to pay for the whole loan and wiping out the balances for good can breakdown the lending sector, the answer was to agree to an exact percentage of payment from the debt stricken borrower.
Debt settlements tend to be considered a risky way of getting out of financial obligations. However, it became the legitimate and simplest way for both parties (lender and borrower) to come to an agreement without losing too much of their finances.
This law banned companies offering debt relief to collect fees upfront. A settlement agreement must be in effect first before they get any form of payment from the borrowers and small companies who have enlisted their help.
With these two acts, debt settlement became one of the best choices for credit card relief. The ideal settlement was up to 50% off but that was on a case to case basis that is dependent on the ability of the borrower to give the money back the credit card company.
The National Debt Relief has an official website, and it can assist financially distressed citizens and companies to achieve a long-lasting recovery from their debts.
If you wish to learn more about these laws and how you can benefit from them, please get in touch with us. NationalDebtRelief.com exists to help financially troubled individuals and companies achieve a lasting recovery from their debts.