Credit Debt Relief

According to recent statistics, more than 50 percent of American families have credit card debt and the average debt per household is around USD 15,000. The situation has got worse since the economic downturn caused pay cuts and large-scale job loss. People have started looking at the administration for credit debt relief as they are finding it difficult to deal with the situation on their own. The administration in an attempt to revive the economy enacted the American Recovery and Reinvestment Act of 2009. Under this act, the government has pledged to spend 787 billion dollars over the next ten years to revitalize the economy, with most of the money to be spent in the first 3 years. For the people who are reeling under credit card debt, the government also enacted the Credit Card Accountability Responsibility and Disclosure Act of 2009 which made sweeping reforms to the way credit card companies did business.

Credit Debt Relief Act

The administration responded to the cry of the general population by enacting the Credit Card Accountability Responsibility and Disclosure Act of 2009 which is popular known as the credit card reform act of 2009. Under this Act, the government made substantial reforms to the credit card industry to protect consumers. The government believed that the credit card companies were exploiting the consumers by misleading them with ambiguous contract agreements and arbitrary changes. Some of the changes made under the federal government credit card debt relief program are:

• The terms of the contract will have to be online for government scrutiny. Card companies have been instructed to not use ambiguous terms in the contract like 'Fixed Rate' and 'Prime Rate'. They will have to give clear definitions of the terms they use in the contract. The act also stipulates the size of the font to be used for the credit card contracts. Customers also have the option of setting their credit limit and card companies are prohibited from charging exorbitant amount of 'over the limit' fees.
• To protect the vulnerable population, card companies have been restricted from selling credit cards to people under the age of 21 who do not have an income. They can only sell a card to this population if they have a co-signer with stable income over the age of 21. The new act also restricts card companies from putting expiry dates on gift cards for less than 5 years. They cannot charge customers any fees or levy penalties if the card is not used for 12 months. These reforms were made to safe guard the interests of the general population.
• As part of the credit card debt relief program card companies are required to send billing statements to client 21 days in advance, which is sufficient time for the customer to respond. Card companies are also prohibited from arbitrarily changing the rate of interest. They have to now inform the customer at least 45 days in advance of any changes in the interest rates. If the customers do not agree to the new terms they have the option of opting out of the contract without their credit score being affected negatively.
• Another provision under the act stipulates that card companies have a fixed due date and if that date falls on a weekend or bank holiday, then the next business day will be considered as the due date for payments. Customers who have a proof of mailing the payments 7 days before the due date will not be charged any late fees. Card companies are also required to give clear explanation of the minimum payment of billing statements. They should specify how much time it will take for the customer to pay off the debt by just paying the minimum payment.

These reforms were made to ensure better business practices and to safe guard public interest. If you are looking for help on debt management, check out credit counseling agencies that are associated with the National Foundation for Credit Counseling (NFCC) or Association of Independent Consumer Credit Counseling Agencies (AICCCA).

One of the other options available for credit debt relief is contacting debt consolidation firms, they will negotiate on your behalf with your creditors and also help you consolidate your loans. Just make sure you do a proper background check on the agency you are hiring and remember to negotiate with them for the fees.