Credit Card Debt Relief Act

Job cuts, lay offs and general depressed condition of the market due to the economic recession that is still gripping the world, have made it difficult to fulfill financial obligations for many. If you are an American bogged down because of an unsecured loan, then you may want to know what are your options. The obvious option open to you, if you are unable to pay up your loans is to file for bankruptcy and be done with it. However, the cost of going bankrupt is too high as it hurts your ability to get any credit for a long time. From the perspective of long term planning, bankruptcy may not prove to a very wise option. The introduction of the Credit Card Debt Relief Act by the President Obama administration has provided a new option for you - that of getting your unsecured loans erased.

Credit Card Debt Relief Act Info

The economic crisis created a need of infusing liquid capital in the financial system. It was a situation when creditors and financiers, who extended unsecured loans to Americans, were filing for bankruptcy because of the non-payment of these loans. Through this act, the American government released $700 billion to these creditors under certain terms and conditions, to stop the economy from getting crippled. This huge amount invested by the government in these creditors is meant to seep, by means of the Obama Credit Card Debt Relief Act, through the financial system to you. Its purpose is to fund institutions and organizations that got into a difficulty because of the lack of liquid cash and encourage badly hurting research and development programs.

The government's credit card relief program, by providing this liquid cash, is trying to generate employment and increase the liquid cash in the financial system, which in turn, will increase the purchasing power of the Americans. This will hopefully, set the wheel of the American and world economy on its course. Now, the Credit Card Debt Relief Program, provisions of which will come in effect step by step, is your rescue out of the unsecured loans trap.

Credit Card Debt Relief Act Provisions

The question is, "Are you eligible for getting your loan erased?" Today, it is not uncommon for an American citizen to have a debt of about $20,000 in unsecured debts. If you have accumulated credit card debts worth more than $10,000 in total, then, yes, you are eligible. The provisions of the Credit Card Debt Relief Act can help you get rid of 50-60 percent of your outstanding credit card debt. In certain cases, even more than 60 percent of the credit card debt can be erased.

The Credit Card Debt Relief Act, along with helping you out of the personal financial problems, also tightens the reins on credit card companies.

• It restricts these institutions from providing new credit cards accounts with credit limits a new card holder cannot support through his financial means.
• In case of a minor (under-21), credit card provider must have a proof about his loan repaying ability or must get an agreement from a parent or guardian to take the responsibility of discharging the loan.
• This act lays more emphasize on getting the high interest rate debts reduced as fast as possible, so a payment above minimum is first applied to it.
• Promotional rates used to entice a consumer to open an account remains applicable for at least 6 months.
• The act makes it mandatory for the credit card issuers to intimate the card holders about the bill overdue, 21 days before its due date.
• If the card provider is changing the terms, then according to the provisions of this act, he must convey them to the card holder 45 days in advance.
• Over-limit fees can only be charged to those card holders who have agreed to such transactions.
• The Obama credit card debt relief act also puts restrictions on the increase in the interest rates applicable to current debts. However, the card issuer can do so, without intimation, if the account is 60 days overdue. If the agreement between the credit card holder and the provider makes such an increase possible, Credit Card Debt Relief Act gives the account holder an option of closing his account and paying his outstanding debt within 5 years.
• The practice of universal default is banned and the act says that gift cards must have life of more than 5 years.
• If the card holder sends his payment by electronic transfer, phone or by mail then only charges for expedited service can be applied to it.
• If a card holder is late with his payment then the issuer has the right to increase the rate. The act says that the consumer by paying six consecutive payments in time can revert to his original rate.

It will take some time for the benefits of Credit Card Reform Act of 2009 to appear, however one has no option but wait for it to happen.

All in all, the Credit Card Debt Relief Act is a golden opportunity for any American citizen to lessen the burden of unsecured loans. There are many financial institutions in the market which can help you in completing the process of getting your debts erased. You need to choose such an agency with care and after researching it thoroughly, because, you will have to submit your financial data to this agency to get the debt relief approved. Search for a counselor, preferably one affiliated with the National Foundation for Credit Counseling or a reputed agency on the Internet and be aware of those who are putting an act of helping you only to rob you of money in charges. If you think it is necessary, take advise from a bankruptcy attorney.