Wednesday, March 7, 2007

FAQ About Credit Card Debt Relief Programs

FAQ About Credit Card Debt Relief Programs

Credit card debt relief programs are plans that help consumers reduce or eliminate credit card debt. Many credit card debt relief programs successfully negotiate payment reductions with creditors while others help consumers pay off credit card debt overtime. It is important to know the course of action the agency you choose will take by asking the right questions about the debt relief program.

What are My Credit Card Relief Program Options?

    There are several credit card relief program options so it is important to understand what is available to you with a particular agency. Most credit agencies offer programs that are designed to help you consolidate your credit card debt and pay one monthly payment toward the debts. This is called a credit consolidation plan. Also available are debt negotiation programs where a credit counselor contacts credit card companies on your behalf and negotiates settlement payments. In some cases, the agency is able to settle a delinquent account for a percentage of what is owed.

Are There Any Program Fees?

    There are usually fees for credit card debt relief programs. Most agencies provide a service and expect to be compensated for helping you. It is important to note, however, that debt relief services by phone cannot charge or collect a fee before they settle or reduce your debt, according to the Federal Trade Commission. Some companies require money up front to pay company fees and to make debt consolidation payments. Debt settlement agencies are required by law to disclose there fees and terms of service before starting your case.

Will The Program Affect My Credit?

    Credit card debt relief programs may have an adverse affect on your credit report. There are a couple of reasons for this. Once you enroll in a plan, you are usually advised to close your credit accounts, which may negatively affect your credit. During your plan, especially consolidation plans, you will typically make a lower monthly payment on your credit card account than is listed in your terms of agreement. Your card company can report this to the credit bureau even if you are participating in a credit card relief program.

Will Phone Calls From My Creditors Stop?

    Phone calls generally cease once enrolled in a credit card debt relief program because the credit counseling agency works with your creditors on your behalf. Most contact regarding your account is handled between the credit card company and the agency. Fair credit reporting and debt collection laws only apply to creditor harassment. If your credit card company calls you to attempt to collect a legitimate debt and does not violate these laws, they are within their rights. If you receive phone calls and would like all contact to stop, you must notify your credit card company in writing to stop all contact with you and by law, they are not allowed to call you except to tell you they will stop communication.

Will I Have Perfect Credit After The Program

    There is no guarantee that your credit will improve after completing a credit card relief program. Many consumers have debt that does not qualify for debt relief programs. If these accounts are delinquent, they will have an impact on your credit regardless of your success during the credit card relief program. Further, there is a difference between a debt relief program and a credit repair program. The former helps consumers manage burdensome debts while the latter helps consumers fix credit. You may have to clarify the services provided your agency prior to enrolling in a plan.

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