Credit Card Debt Collection: Senator Cites Need for Increased Consumer Protection

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A report issued by the Government Accountability Office (GAO) suggests that unfair debt collection techniques are commonplace.  Senator Carl Levin, D-Michigan supports creating a new federal agency that protects consumer rights and enforces consumer entitlement to ethical collection practices. Although the Fair Debt Collection Practices Act (FDCP) was passed in 1977, Senator Levin suggests updating it to reflect new technologies and increasingly aggressive debt collection practices. It takes time to pass legislation, so consumers must protect themselves in the meantime.

Unsecured Debt Consolidation Options Scarce

Qualifying for an unsecured debt consolidation loan for enough to cover all of your bills can be difficult. Short of asking for loans from relatives and friends, what can you do? Consulting a credit counseling service can provide affordable options for repaying credit card debt. Credit counseling services don’t provide debt consolidation loans, but they do work with consumers and their creditors toward developing affordable debt repayment agreements. The benefits of repaying credit card debt through a consumer credit counseling agency include:

• Your credit counselor can help you develop a realistic cash based budget.
• Credit counselors can negotiate reduction and waivers of recurring fees that add to your debt each month.
• Your credit counselor may  be able to negotiate lower interest rates. This helps you pay off your debt faster while keeping your debt from rapidly increasing as unpaid interest is applied to your credit card balances.
• Once you agree to a repayment plan through credit counseling, your credit counselor draws up a written agreement that’s approved by your creditors. Your repayment agreement also acts as a form of credit card debt consolidation, as you make scheduled payments to your credit counseling agency for all of your debts; your credit counseling agency deducts its fee and distributes the balance of your scheduled payments to your creditors. Making one payment instead of several can help you avoid late or missed payments.
• Once you’ve signed a repayment agreement, your credit counseling agency acts as an intermediary between you and your creditors. You can refer collection calls to your credit counselor according to the instructions and terms of your repayment plan.

Making one payment a month (or otherwise if required by your debt repayment plan) is easier than juggling several bills and avoiding phone calls at all hours. You are asked to destroy your credit cards and close your accounts. This may seem unreasonable, but it does ensure that you won’t incur more debt while trying to pay off the debt you already have. Don’t focus on losing your credit cards, but instead look forward to the financial freedom you can enjoy when you’ve repaid all of your credit card debt.

Post written by Karen Lawson

4 Responses to “Credit Card Debt Collection: Senator Cites Need for Increased Consumer Protection”

1. JoanMS Says:
   October 26th, 2009 at 7:56 pm

   Instead of calling a bunch of different companies and listening to them each give me their own sales pitch, I used a referral service. The service told me about all of the different debt management companies (settlement, consolidation, etc), the good and bad of each of them and then helped me figure out which one was best for me. Did you know that what state you live in can have a bearing on which program is best for you? The consultant told me bankruptcy was my best option and helped me find an attorney in my area. She said that they try to refer to debt settlement or consolidation, but if bankruptcy is really the best option…she wasn’t going to refer me to something that wasn’t good for my particular situation. Use a referral company…they tell you the truth! I used “etpsfreedebthelp.org”. Hope this helps someone!

2. klawson Says:
   October 28th, 2009 at 3:10 pm

   Thanks for the suggestion. I think it’s important for people to get an objective opinion before making a final decision on how to deal with debt.
   The levels of stress and emotion that accompany insurmountable debt can lead to “fuzzy logic”–getting professional debt help can clear the way for financial recovery.

3. Tamara Holmes Says:
   November 2nd, 2009 at 1:18 am

   If you go to a number of credit debt websites looking for ways to reduce your credit card debt, you will find a veritable cornucopia of ideas and methods on how to get rid of your debt. Some work better than others. But many of them do have merit and it is worth your time taking a look at them. In this article, you’ll learn how to reduce your credit card debt by starting with the highest interest card first.

4. klawson Says:
   November 2nd, 2009 at 12:51 pm

   Thanks, Tamara. It’s possible to save more money by eliminating highest cost debt first, but consumers who have a few small bills may gain psychological satisfaction by eliminating small debts first. Whatever works. The idea is to eliminate debt.

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