Know your consumer rights

Many people are struggling to pay their credit card bills in this tough economy. Because many turn to businesses offering debt relief services it has encouraged lawmakers to adopt stricter regulations of financial institutions and debt settlement companies to prevent consumer abuse. Now It’s important to than ever to know your consumer rights!

Make sure you stay informed about the following consumer protections, so you do not fall prey to unscrupulous financial practices.

FTC Rules to Protect Consumers in Credit Card Debt – In July 2010 the Federal Trade Commission announced amendments to the Telemarketing Sales Rule making it illegal for debt settlement companies to collect advance fees prior to settling, reducing or otherwise resolving a customer’s credit card or other unsecured debt. The new rules require a written agreement between the consumer and the creditor and the consumer has to make at least one payment to the creditor as a result of the agreement before fees can be charged by the settlement company. The rule also prohibits debt settlement companies from making false or unsubstantiated claims about their services and fully disclose certain information prior to the consumer signing up; such as how much it will cost, the negative consequences that could result, key information about dedicated escrow accounts and how long it will take the company to get results. However, these rules to for profit organization and non-profit organizations are exempt.

Credit Card Accountability Responsibility and Disclosure Act - There are a lot of great provisions of the new CARD Act, which went into effect in February 2010 - with the final provision implement in August. The following are some of the most helpful to consumers: Time to pay your bill is 21 days instead of 14. The payment date is the same date each month instead of a floating date. Card issuers can no longer change APR, fees, or finance charges on outstanding balances unless the rate you were give was an introductory rate (lasting for only a specific amount of time) or your rate was reduced during a short-term hardship arrangement. If there are any changes in your billing/finance charges the creditors must notify you 45 days prior to the change taking effect instead of 15 days. And you have the right to opt out. The creditor must post how long it will take you to get out of debt if you pay the minimum payment due. Fees for going over the credit card limit are no longer allowed unless you specifically authorized the credit card company to allow you to make purchases that put you over the limit. Credit card companies can no longer charge a fee for payment sent by mail, electronically, or phone payments unless you need the payment to be expedited to make the payment due date. Any payment made that is over the minimum required payment must be applied towards the balance with the highest interest rate. Credit card companies are not allowed to issue cards to consumers under the age of 21, unless they can prove they have the financial means to repay the debt or they have a cosigner.

Fair Debt Collection Practices Act – Creditors and collection agencies have rules governing their collection procedures both nationally through the Fair Debt Collection Practice Act (FDCPA) and locally through state laws. These laws govern several issues. They specify how and when and where a collector may contact you. The Federal Trade Commission (FTC) states that a collector may contact you by phone, fax, or mail. They can only contact you by phone between the hours of 8 a.m. and 9 p.m. Collectors may contact others associated with you such as friends, relatives, or your boss to leave a message, find out where you live, and obtain a phone number or find out where you work. They are prohibited from discussing the debt or amount of money owed. If they contact you at work and you advise them that you cannot receive such calls they must honor your request not to contact you at work.

If you use credit cards, owe money on a personal loan, or are paying on a home mortgage, you are a "debtor." If you fall behind in repaying your creditors, or an error is made on your accounts, you may be contacted by a "debt collector."

You should know that in either situation, the FDCPA requires that debt collectors treat you fairly and prohibits certain methods of debt collection. Of course, the law does not erase any legitimate debt you owe. The following are questions commonly asked about your rights under the FDCPA.

SECTION 805 – COMMUNICATION IN CONNECTION WITH DEBT COLLECTION

• Collectors may only call after 8:00 a.m. and no later than 9:00 p.m. (in your time zone).
• Collectors cannot contact you once you notify them that you are being represented by an attorney.
• Collectors may not call a consumer’s place of employment, once the consumer advises that they are prohibited from receiving such calls.
• Collectors may not communicate account specifics with any person other than the consumer himself (unless authorized by the consumer or cosigner to do so). This includes all family members.

SECTION 806 – HARASSMENT OR ABUSE

• Collectors may not use threats of violence or other criminal means.
• Collectors may not use profanity.
• Collectors may not continuously call, annoy, abuse, or harass consumers.

SECTION 807 – FALSE OR MISLEADING REPRESENTATIONS

• Collectors may not use any false or deceptive or misleading representations.
• Collectors may not threaten to take any action that cannot legally be taken.
• Collectors may not give or threaten to give out false credit information.
• Collectors may not distribute any falsely written communication simulating any document authorized, issued or approved by any court, official, or agency of the United States or any states.
• Collectors may not use any name other than the true name of the collector’s business, company, or organization.
• Collectors may not falsely imply that they are employed by a consumer-reporting agency.

SECTION 808 – UNFAIR PRACTICES

• Collectors may not use unfair or unconscionable means to collect or attempt to collect any debt.
• Collectors cannot accept a check or other payment form from the consumer that is postdated by more than five days.
• Collectors may not solicit any postdated check for the purpose of threatening or instituting criminal prosecution.
• Collectors may not deposit or threaten to deposit any postdated check prior to the date on the check.
• Collectors may not cause charges to be made to the consumer for the price of communication.
• Collectors may not take or threaten to take non-judicial action to effect dispossession or disablement of property.
• Collectors may not communicate with a consumer by postcard.
• Collectors may not use any language or symbol other than the collector’s address and name on any mail sent to the consumer.

SECTION 809 – VALIDATION OF DEBTS

• Collectors must notify the consumer in writing within five (5) days, validating their debt.

SECTION 810 – MULTIPLE DEBTS

• If a consumer owes multiple debts to one creditor and makes a payment to the collector for one specific debt, the collector may not apply such payment to any disputed debt and MUST apply the payment as the consumer directs.

The Fair and Accurate Credit Transactions Act - The FACT Act helps to combat and reduce identity theft and protects the privacy of consumer financial information. It guarantees you a free copy of your credit report every 12 months from the three major credit reporting agencies. Additionally, it implements a fraud alert system to enable consumers to place alerts on their credit files if you think you have been the victim of identity theft. Also, Account numbers on credit card receipts are now required to be shortened - removing the consumer's name and full credit card account number.

Divorce and Debt....

That vow of for better or worse also meant that you share in whatever debts you and your spouse accumulated in the marriage. Mortgages and credit cards are usually the biggest joint debts. You are both responsible for anything you have signed together like joint tax returns, joint credit card debts, joint mortgages or loans. If your spouse is spending money recklessly after you file for divorce, file a motion with the court explaining what is happening and ask for an early hearing.

Keep track of any money you pay on joint debts, especially when the debt was your spouse's responsibility.

If you live in a state where all the property acquired during the marriage is put in a pot, judges have enormous discretion as to how they divide marital debt. If your state considers only property acquired jointly, judges consider who incurred the debt and who is in a better position to pay. Other states determine which spouse is responsible for the debt.

Essential things to Remember:

• If you do share joint credit cards then you should cancel them as soon as you know your marriage is ending to insure that the balance does not increase any further. Be sure to include on your list not only your major credit cards but your department and gasoline charge cards as well. You will also want to get a new credit card in your name only so that you may begin to build individual credit.
  
  
• If your spouse is unable to pay a debt assigned to them in the divorce agreement, the credit card company or loan officer can legally require that you pay the debt. Late payments made by your spouse may show up on your credit report.
  
  
• In most states, any debt that was incurred by your spouse BEFORE you married is their sole responsibility.
  
  
• According to the Federal Trade Commission, a creditor, by law, cannot close a joint account because of a change in marital status, but can do so at the request of either spouse. A creditor, however, does not have to change joint accounts to individual accounts. The creditor can require you to reapply for credit on an individual basis and then, based on your new application, extend or deny you credit. In the case of a mortgage or a home equity loan, a lender is likely to require refinancing to remove a spouse from the obligation.
  
  
• If you are given a portion, or all, of a marital debt to payback- consider contacting the lender to negotiate a lower interest rate. Many companies will offer a slightly lower rate if they think they will lose your business.
  
  
• Attorney Gayle Rosenwald Smith suggests that if you do hold joint debt you may want to borrow money, in your own name, to pay it off. This way you are only responsible for individual debt.
  
  
• Know that your credit card company, bank or mortgage company are not bound by your divorce agreement. Whomever's name is on the dotted line is responsible, no matter who filed for divorce.
  
  
• If you and your spouse have filed joint tax returns that you think may not have been correct you will want to speak with your attorney about adding a clause to the agreement that states that whoever is responsible for the errors be responsible for paying the tax due and or penalties.

Wage Garnishment- Title III, Consumer Credit Protection Act (CCPA)

Who is Covered

Title III of the Consumer Credit Protection Act (CCPA) is administered by the Wage and Hour Division (WHD). The CCPA protects employees from discharge by their employers because their wages have been garnished for any one debt, and it limits the amount of an employee's earnings that may be garnished in any one week. Title III applies to all employers and individuals who receive earnings for personal services (including wages, salaries, commissions, bonuses, and periodic payments from a pension or retirement program, but ordinarily does not include tips).

Basic Provisions/Requirements

Wage garnishment occurs when an employer is required to withhold the earnings of an individual for the payment of a debt in accordance with a court order or other legal or equitable procedure (e.g., Internal Revenue Service (IRS) or state tax collection). Title III prohibits an employer from discharging an employee because his or her earnings have been subject to garnishment for any one debt, regardless of the number of levies made or proceedings brought to collect it. Title III does not, however, protect an employee from discharge if the employee's earnings have been subject to garnishment for a second or subsequent debt.

Title III also protects employees by limiting the amount of earnings that may be garnished in any workweek or pay period to the lesser of 25 percent of disposable earnings or the amount by which disposable earnings are greater than 30 times the federal minimum hourly wage prescribed by Section 6(a) (1) of the Fair Labor Standards Act of 1938. This limit applies regardless of how many garnishment orders an employer receives. The federal minimum wage is $7.25 per hour effective July 24, 2009.

Title III permits a greater amount of an employee’s wages to be garnished for child support, bankruptcy, or federal or state tax payments. Title III allows up to 50 percent of an employee's disposable earnings to be garnished for child support if the employee is supporting a current spouse or child, who is not the subject of the support order, and up to 60 percent if the employee is not doing so. An additional five percent may be garnished for support payments over 12 weeks in arrears.

An employee’s "disposable earnings" is the amount of earnings left after legally required deductions (e.g., federal, state and local taxes; Social Security; unemployment insurance; and state employee retirement systems) have been made. Deductions not required by law (e.g., union dues, health and life insurance, and charitable contributions) are not subtracted from gross earnings when the amount of disposable earnings for garnishment purposes is calculated.

Title III’s restrictions on the amount of wages that can be garnished do not apply to certain bankruptcy court orders and debts due for federal and state taxes. Nor do they affect voluntary wage assignments, i.e., situations where workers voluntarily agree that their employers may turn over a specified amount of their earnings to a creditor or creditors.

Employee Rights

Title III will in most cases give wage earners the right to receive at least partial compensation for the personal services they provide despite wage garnishment. This law also prohibits an employer from discharging an employee because of the garnishment of wages for any single indebtedness. The Wage and Hour Division accepts complaints of alleged Title III violations.

Recordkeeping, Reporting, Notices and Posters

Notices and Posters

There are no poster or notice requirements under Title III of the Consumer Credit Protection Act.

Recordkeeping

There are no recordkeeping requirements under Title III of the Consumer Credit Protection Act.

Reporting

There are no reporting requirements under Title III of the Consumer Credit Protection Act.

Penalties/Sanctions

Violations of Title III may result in the reinstatement of a discharged employee, payment of back wages, and restoration of improperly garnished amounts. Where violations cannot be resolved through informal means, the Department of Labor may initiate court action to restrain violators and remedy violations. Employers who willfully violate the discharge provisions of the law may be prosecuted criminally and fined up to $1,000, or imprisoned for not more than one year, or both.

Relation to State, Local, and Other Federal Laws

If a state wage garnishment law differs from Title III, the employer must observe the law resulting in the smaller garnishment, or prohibiting the discharge of an employee because his or her earnings have been subject to garnishment for more than one debt.

Compliance Assistance Available

The Department of Labor provides employers, workers, and others with clear and easy-to-access information and assistance on how to comply with the Consumer Credit Protection Act on the Compliance Assistance "By Law"(http://www.dol.gov/compliance/laws/comp-ccpa.htm) Web page.

More detailed information, including copies of explanatory brochures and regulatory and interpretative materials such as the Federal Wage Garnishment Law Fact Sheet(http://www.dol.gov/whd/regs/compliance/whdfs30.pdf), may be obtained from the Wage and Hour Division’s Web site(http://www.dol.gov/whd/) or by contacting a local Wage and Hour Division office(http://www.dol.gov/whd/america2.htm).

Total Debt Relief's Do-It-Yourself Guide To Debt Settlemen

Taking Control of Your Financial Life

You have went through the process of trying to lower your monthly payments, you have budgeted and you are still coming up short to pay the minimum monthly payments on your credit card balances. One way to lower your monthly credit card payments is to consolidate your debt into one loan.

This is called a debt consolidation loan which usually takes a home equity loan out to pay off the unsecured debts that you want to consolidate into one loan payment. This can lower the monthly payment considerably and make the debt more manageable.

Things you that you will want to beware of when you get a debt consolidation loan are if it is a secured or an unsecured loan. A secured loan can be tied to either a car, or a home. If you don’t make the payments you can loose your home or car. If you can get a personal loan that is unsecured to complete the debt consolidation, failure to pay it back will not result in a home foreclosure or car forfeitures. The type of loan that you will ultimately qualify for depends on your credit rating, the amount you are requesting and the type of debt you are going to consolidation. Sometimes there are up front points that can add to the cost of the debt consolidation loan and you should be cautious of these points as they can be costly. (I would never recommend taking unsecured debt and securing it with property)

A debt consolidation loan can often lower your interest rate considerably, and most often they are fixed interest rate. This will speed up the repayment process considerably. Another benefit to having a home equity debt consolidation loan is that you can deduct the interest off on your taxes.

Today debt consolidation loans are not your only solution and you should research all options available to you in reducing, settling and eliminating your debt before making your decision. The benefit to doing debt consolidation is that it may help save your credit rating, simplify the repayment of your credit card balances with lower interest rates which should reduce your monthly payment considerably.

Other debt relief options are Credit Counseling Services/Debt management Plans, Debt Settlement Programs (I would only recommend debt settlement with an attorney) and as a last result bankruptcy. For more information on these debt relief options please visit us on the web at www.tdrelief.com

Article by:
Christopher L. Kessler

Legal Debt Settlement vs. Traditional Debt Settlement

I have been working in the Finance, credit collections and debt settlement industry for almost 16 years now and have very extensive knowledge as to how it works.

The purpose of this article is to explain to you first how debt settlement works and what the process entails; both the good and the bad. Next I will explain the differences between how a debt settlement law firm works and how it compares to a standard debt settlement company. There are many differences between how this process is handled by the two. Because of this debtors should learn these differences before enrolling into any program. Many people may already know how a debt settlement company works but have no clue as to how a law firm works and this article will explain just that.

First of all, I would like to state that debt settlement as a means of credit card debt relief is not for everyone; some people simply do not have the right state of mind, while others may benefit more from bankruptcy.

I would like to go over the purpose of credit card debt settlement and how the process works. The purpose of debt settlement is for the debtor to get out of debt quickly without having to file bankruptcy and save a lot of money in the process. The goal of the debt negotiator is to negotiate a one time lump sum payment or a term payout on the debtors' behalf at a far reduced amount than what the debtor currently owes.

The debtor could save themselves close to half of what they currently owe and be out of debt in a few years. However, as with most things in life there are drawbacks to this process and there is no way to avoid them.

In order for any creditor to be willing to negotiate a debt settlement on a debt the account must fall into default status. Creditors simply are not willing to negotiate when you are current and up to date on your monthly minimum payments. If they feel you can maintain your monthly minimums than this is precisely where the creditors want to keep you. This is where their profit is made, by just paying the minimum each month you will be in debt for over thirty years, even if the interest rate is not very high. If your rate is above 20%, you will be stuck in debt for well beyond thirty years and payback the creditors well over ten times the original balance in interest.

So understandably they will not negotiate with you when you are current and they feel they can still bank on your minimum payments for years to come. Therefore, you must fall behind on the monthly payments. Once you do this you will be negatively affecting your credit score and will also be receiving calls from collectors. Typically this is what may put some people off from doing debt settlement. For consumers already behind this will not make such a severe difference.

You must also be made aware that this process in the end will begin to help rebuild your credit. Thirty percent of your MyFICO credit score is made up of your debt to credit ratio, which will look a lot better after you get out of debt. Additionally the negative remarks from falling behind will not hold much bearing on your credit score after two years. Your credit score is only a snapshot in time and only uses the last two years of payment history to determine the score.
Now during the process of falling behind your goal is to save up as much money as possible in the quickest possible time. This money is then used later on to pay off the settlement that is negotiated by the debt negotiator. The faster someone looks to save money and complete this process the better for many reasons. The faster you are out of debt the more money you stand to save and the less risk you take from the negative aspects of settlement such as lawsuit and further damage to the credit report.

This brings us to the title of the article "How Does a Debt Settlement Law Firm Work?" As I explained above there are great benefits to debt settlement such as saving lots of money and time; and there are also some downsides such as collection calls and the possibility of a lawsuit.

The main differences between how debt settlement is handled by a debt settlement law firm and standard debt settlement company is how they deal with the negative drawbacks. A law firm has much more legal power and is set up correctly to comply with their states' laws.

Collection Calls

One of the first major differences in how debt settlement is handled has to deal with collections calls. When you first fall behind and your debt is still in the hands of the original creditor there is nothing legally that can be done to stop them from calling. However, once the creditor passes the account off to a third party collection agency which will happen anywhere between 3-6 months after falling behind things change. Legally once in the hands of the collectors a law firm will have the power to have all calls to their client stopped, and if the collector continues to call and harass the client legal action can be taken against that creditor seeing as they will be in violation of the FDCPA (Fair Debt Collections Practices Act).

So the client's first advantage by using a law firm will be a much decreased activity in collection calls, and this is very important for some people. Regular debt settlement companies that claim they can stop the calls are simply not telling you the truth and you should be very weary of them because of this.

Lawsuits

The next major advantage a law firm has concerning debt settlement is how a lawsuit can be handled. In case you are not aware once you fall behind on your credit card debts the creditors/collectors do hold the legal right to pursue you through the courts to collect the debt. I will mention, that suing is not the mainstay of the collectors and is not exercised very often; reason being it simply costs too much money and time on the creditor's behalf with no guarantee of getting any money even if they were able to obtain a judgment.

The advantage the law firm has is they can still legally contact and negotiate a settlement with your collector after they have issued a summons to court. A debt settlement company does not have this legal power. The collectors are very willing to negotiate a settlement even after the summons has been issued; they realize they may get very little if anything regardless, so being contacted by a reputable law firm who is willing to offer them money and settle the debt without wasting anymore time or money with going to court is very beneficial to the collector.
If you get sued and you only have a standard company representing you, you can expect to go to court and try to figure it out yourself. This often results in a judgment for the debtor!

Correct Legal Set Up

Perhaps the biggest advantage the law firm has over a company is how they are set up. The vast majority of debt settlement companies are not legally allowed to work in all the states; many are not even set up correctly to operate in their own state.

The states' attorneys and the FTC (Federal Trade Commission) are cracking down several on these companies and shutting them down as fast as possible. When this happens often times the company does not have the money to payback its clients for the fees they paid to a company that will no longer be in business and can no longer help to settle their debts. Now the debtor will be left holding the bag having paid fees but still be stuck in debt, and this nightmare scenario happens more than you may think. Thus making law firms a much, much safer option!
Another issue that many people have with debt settlement companies is they will not disclose how this process works and will simply sugar coats things and preach about the great benefits but never mention one downside. A law firm legally must disclose everything about how this works before being able to enroll anyone into any structured payment plan. A lot of companies do not have your interest at heart and will say whatever it takes to get you signed up even if they are fully aware that they are setting you up to fail.

Which brings me to my last point; a lot of unscrupulous companies will allow their clients to sign into a program and pay whatever they want and put them into programs that are set up for much longer than they should be. By stretching a debt settlement program out the savings will decrease and the potential for a lawsuit will increase. These companies cannot legally give the client advice or assistance if they get sued; it is considered unlicensed practice of law and this is what I mean by them knowing they will be setting you up to fail. If you can't get this process done within three or four years, on debt under 65K and a max of six years on debt over 65K, you should seriously consider bankruptcy. A law firm will be strait up and tell this to you, where many shady companies will keep trying to sign you up.

I really hope after reading this article you feel enlightened and now have a much better understanding of how debt settlement works and how a law firm can advantage you the most. I know for the most part I have been focusing on the negative aspects of debt settlement, but I feel it is important for people to understand both the good and the bad, allowing them to make an educated wise financial decision on how to get out of debt. But you must realize just how powerful the benefits of this process are! Saving close to half of what is currently owed and becoming debt free in a few years will be so beneficial to your current and future financial well being. Credit card debt has a way of destroying people's finances and their lives and debt settlement is the perfect alternative for those who want to escape debt quickly and avoid the embarrassment of filing for bankruptcy.

If you are curious as to whether using a debt settlement law firm can benefit your financial situation then I invite you to contact us at 800-627-9667 or simply follow the link below fill out an application. Total Debt Relief, inc. welcomes the opportunity to review your situation to see if you qualify debt settlement, if you qualify your application will be processed and forwarded to an attorney for approval.