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Credit Card Applications » News » Other » Credit Card Debt Guidance

Credit Card Debt Guidance

October 15, 2007 | Updated on October 15, 2007
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The content is accurate at the time of publication and is subject to change.

Applying for Credit Card Debt Management Plan Ask the Right Questions

With the US national credit consumer debt ever growing, more and more customers resort to credit counseling or debt management companies. However, not all of them know or seem to know of the companies' for-profit tricks or of the latest changes and bills in the debt management industry.

Let's face it, there is no big problem to apply for credit card of your dream - most banks are eager to cooperate if they are sure they can profit by you. The real problem captures you on the credit card spending track or on your way to settle an unmanageable debt.

While most debt managers try to keep their predatory policies to themselves, consumer rights protection groups and consumer advocates are disclosing some useful tips for debtors' protection and inform them about the latest legislations.

So, when next time, in an attempt to avoid bankruptcy, home foreclosure or just pay off huge credit card debt, you turn to credit counseling, you are sure to make them play your rules.

What do we mean? Consumer advocates advise that you should learn three main questions before you enter a credit counseling agency and sign the agreement.

  • Who will really handle my account throughout the process of debt settlement? This question is going to astound your debt manager as it is a cost determining issue for them. We have a story from a business credit card holder who had run unmanageable balances and went to a credit counselor for relief. The trick was that he signed the contract with a nonprofit counselor but the process itself was then handed over to a for-profit office. So, they made quite a revenue at the price of the man's purse.
  • Are you going to charge me penalty fees for quitting the game? You may find it possible to pay off the debt before the end of the plan, and most credit counseling companies charge you fees for that. Find out about the upfront fees and if they do practice them - do not sign up.
  • When are you going to start sending my money to my creditors? The agency may hold your money for as long as 30 days before transmitting it to the credit card company. Be sure, it will lead to increased interest and bad record on your credit report.

The responses you get must help you make the right decision - whether to sign up or try to settle the debt yourself, which is less costly anyway. So, that's what you can legally do guided by your civil rights - ask questions.

But you needn't count on yourself only. Your state law also stands on your guard. We expect the issuance of uniform state laws for debt management firms all over the USA.

The laws are supposed to provide adequate disclosure of rates, the company owner and a general guidance for credit counseling agencies. Knowing your rights under the provision of the Uniform State Laws issued by the American Association of Debt Organizations, you can avoid the self-profit activities of debt managers and have them more or less honestly fulfill the plan of debt repayment. Or you can turn down the idea of credit card debt management plan at all and use your own resources.

Take your time and think but always remember that your civil and credit consumer rights are always being protected by the consumer groups and advocates. Make use of their help before you get involved with debt managers.

Disclaimer: This editorial content is not provided or commissioned by the credit card issuer(s). Opinions expressed here are the author's alone, not those of the credit card issuer(s), and have not been reviewed, approved or otherwise endorsed by the credit card issuer(s). Reasonable efforts are made to present accurate information, however all information is presented without warranty. Consult a card's issuing bank for the terms & conditions.
All rates and fees, and other terms and conditions of the products mentioned in this article/post are actual as of the last update date but are subject to change. See the current products' Terms & Conditions on the issuing banks' websites.
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