Benefits of Debt Relief Programs

People with mounting debts can reap major benefit from debt relief programs. These programs are designed for this specific purpose but choosing the specific terms of the plans could affect each individual’s financial condition differently. If you wish to free yourself off any debt, then you must choose a debt relief program that meets your needs.

For instance, debt negotiation is one common debt relief program that offers benefits to the debtor. It saves money since you will get to pay a reduced amount from the original amount of debt you owe, it will save you time as professional debt negotiators will be the one discussing this debt reduction process on your behalf. If you are able to choose a reliable and sound debt relief program, most people with debts find themselves free of debt within two or three years.

Common Scam Techniques

While there are several legitimate debt relief companies available in the industry, there are a few others who are looking to take advantage of people’s urgency to settle their debts. Like with legitimate debt relief companies, they offer debtors a promise of the opportunity to become debt-free. Sadly though, they most often target individuals who are desperate to find debt relief since they cannot afford to lose their money.

There are a few common tell-tale signs that the debt relief program you are dealing with is a scam. Hence, identifying them will help you recognize whom to trust and whom not to in terms of finding solution for your debt problems.

Charging to Fix Your Credit Report

There are a few debt relief programs who offer their services of cleaning out your credit report and any errors with massive fees. This process is quite intricate, which is the reason why most people often opt to hire professionals to do it for them. However, you need to be extra careful with choosing since some of them can be outright deceptive. Another reason why such claims are considered scam is that you can fix credit report free of any charge. There are three credit bureaus from which you can acquire a free copy of your yearly credit report. When you have the copy, study it for any false information or suspicious transactions.

Getting a Loan To Fix Bad Credit

This particular scam technique affects debtors in two ways. First, you are charged for a loan that you are not even qualified for to begin with. Therefore, the money you spend trying to settle the loan is put to waste since you could have used that trying to settle off your previous credit card debts. Next, although your creditor makes claim that you aquired a loan to pay your debt, you never get to receive any money from that loan. Worse thing is, these scams do not provide you with a legitimate company name so they basically run away with your money while you are left with no way to trace them.

False Identity

This is a sure sign that you are dealing with bogus credit repair companies. When they ask you to create a new credit identity to attain a high credit score, then you need to realize that this is a complete illegal move. Even if you are unfamiliar with legal laws, then everyone might be aware that creating false identity is a clear violation of law.

Therefore, make it a point to screen out the credit repair company you are dealing with before you decide to work with them. If you are serious about getting rid of any credit card debt you currently have, then opting for illegal means is not the best way to do it. Moreover, being subjected to scams would cause you money that could have been used to pay off your credit card debts.

The Fair Debt Collection Practices Act

The Fair Debt Collection Practices Act, (also known as the FDCPA), is a US Statute added in 1978 with later amendments which protects consumers from unscrupulous debt collection agencies or methods.

It also gives consumers a way of challenging inaccurate information that may be held against them.

This report gives a summary of the provisions of this law.  But it’s not include all of the details and its accuracy is not guaranteed.

What It Covers

The FDCPA regulates debt collectors, who are defined as

“any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another.”

This means that it covers the situation where a debt collection agency is contacting you to collect payment of a debt that you owe to another institution, such as a bank or credit lender.  If the bank is collecting the debt itself, the FDCPA does not apply, although some states have laws that regulate institutions that collect their own debts too.

What Debt Collectors Must Do

• Every time they contact you, they must tell you who they are and that they are a debt collector.

• They must notify you of your right to dispute the debt. This notice is called a 1692g Notice.

• If you ask in writing within 30 days of receiving this notice, they must tell you who the original creditor was (the name and address of the company or institution that you owed the money to). They must also produce proof of the debt if you request it within this 30 day period.

• If they file a lawsuit, it must be in the place where you live or where you signed the contract that incurred the debt. So if you used to live in New York and you got into this debt while you lived there, but now you have moved to Washington, the debt collector can file a lawsuit either in New York or in Washington. Nowhere else.

What Debt Collectors Are Not Allowed To Do

• They must not phone you after 9 pm or before 8 am (your time zone).

• They must not continue to contact you if you give them written notice that you do not want further contact or that you refuse to pay the alleged debt; except that they can still tell you certain things, e.g. that they plan to file a lawsuit or that they are writing off the debt.

• They must not harass you by telephone, e.g. constantly ringing you.

• They must not contact you at your place of work after you ask them not to in writing.

• They must not threaten you with arrest or legal action unless these things are genuinely possible and planned.

• They must not use abusive or profane language.

• They must not engage in misrepresentation or deceit.  For example, they must not lie about how much you owe, or claim to be attorneys when they are not. They must not demand extra unjustified amounts above what you owe.

• They must not go on contacting you after you give them details of an attorney who is representing you, they must contact your attorney instead.

• If you ask them for verification of the debt within 30 days of the 1692g Notice, they must not contact you until after they have sent you the verification.

• They must not contact you in way that reveals your debt to others, e.g. putting details on a postcard, or sending a letter in an envelope that is marked as being from a debt collection agency.

• They must not publish your name and address on a bad debt list.

• They must not reveal or discuss your debt with anybody who is not involved, except your spouse or your attorney, and they must not threaten to do this (e.g. they must not threaten to tell your employer).

• They must not put false information on your credit report, or threaten to do so.

If you have been subjected to practices which are against the terms of the act you can report the collection agency to the Federal Trade Commission. You can also sue the collection agency, but it would not be worth while for most people to do this. That is why the Federal Trade Commission takes the role of enforcing the Fair Debt Collection Practices Act.