President's New Reforms on Credit Card Debt Consumers

According to the latest reports by Federal Reserve, the total credit card debt in the United States have reached $963 billions in February, the increase of around 28 percent in December, 2008. Also it was checked by Federal Reserve that the issuers collect a sum of $ 14 billion in a year on the account of penalty fees and 9.8 percent of the credit card industry's revenue.

As per the survey of Federal Reserve women are more responsible than men for credit card debt in United States

It was reported by abcnews that President Barack Obama has decided to bring some changes for the customers when he came to know that one company that provides credit counseling services has enrolled more people in debt management. He also came to know that there are many companies where the amount of customer debt is going on increasing everyday. He called the meeting with many industry executives and decided to bring some new reforms in terms of credit card debt.

On account of this meeting, Obama decided to bring these reforms :

• interest rates will be doubled
• clarity and transparency should be increased in card's terms and conditions
• fees will be added to the consumer's bill
• All the forms that credit card company issues should be written in simple language
• No more fine prints and no more usage of confusing terms and conditions.

"Making informed decision is very necessary in the credit card industry", added the president.

Obama conducting meeting with high executives of USA for bringing changes in credit card debt plans

Genesis of Bad Credit

Credit world has become part of us nowdays. Today, banking institutions are more keen in providing different forms of credit from credit card to personal loans. Moreover, the amount of people with credit card is rising at an increasing rate. As far as i think hardly any people can do without credit. Bad credit situations in the form of court judgment, bankruptcy, and loan default is created due to lack of finance education among the consumers.


What does exactly credit means? It is nothing but getting a service or cash grant to use for your own purpose. In credit, you are often bound with an agreement to repay the loan or cash in future agreed the same with the lender. Credit exists in different forms like loan, mortgage, or credit card.Credit History of the borrower is checked thoroughly before you can get credit from any lending agency or institution. In case you have a bad credit history you will find it almost difficult to get credit any time you apply for it.


But you can reestablish your credit worthiness by improving your credit history or by building and repairing the credit history. This is what we called as " credit repair ". It is that process in which consumers having unfavorable credit histories can easily re-establish their credit-worthiness. The best part is you dont have to be dependent on any credit institutions to repair your credit, you can do that yourself too if you do it with proper dedication.


Remember one thing that if you repair your credit it will make it easy for you to get low interest credit, car or home loans.On the other hand with weak credit rating you may not be able to get loan or be subjected to high interest rates and several other unnecessary conditions.

Lessons Learned from Collection Agencies

Today i must say that finally i have reached on a resolution regarding my credit disputes. I have understood one thing that at least from two credit bureaus the collection account is removed. I m still confused about TransUnion, but now since i have received the letter from the MD Penn Foster, i m sure that it will be resolved. Plus i will be checking credit reports with scores for the entire quarter and i have learned a lot in these few months that has taken to resolve my issue.


The most important thing that i have learned during all these processes is that when it comes to dealing with collection agencies, stay away. They don't care about anything but getting paid, so anything that you say will not have any influence with them. If possible talk to the original creditor first to try and solve the issue. If things don't work out then, go to the collection agency. I want to add an advise for all of you that only communicate to them in writing and do not sign any of the letters that you mail them (they can forge your signature). The most important thing to be kept in mind is that make sure that every letter is certified with return receipt requested. If they call, don't answer. Remember, everything must be documented in writing. Telephone calls are hardly documented and trust that all you'll hear are threats anyway.


For resolving credit report disputes sending the documentation via mail is very important. You won't believe when I called TransUnion once, the lady asked me when did I send my information and I had proof that I did. So i was like saved at that point of time. Also, when disputing your report, be persistent. If it is not to your satisfaction the first time, keep trying. It doesn't hurt anything and eventually they will get the message to fix your report.



Keep in mind you should never wait until tomorrow to respond to a letter you receive from the collection agencies or any of the credit bureaus. Try to reply on the same day if you can. Putting it off just makes the process longer and more frustrating for you.

Understand Individual Voluntary Arrangement

Individual Voluntary Arangements or IVA is an agreement between any individual and their Creditor. It is nothing but an alternative to Bankruptcy which brings an individual to an agreement with the people and firms whom they owe money to repay their debts, paying off certain percentage of outstanding debts over a period of time.

Rules for IVA these days are very flexible by nature. By applying for IVA it will always mean that you will get lump sum upfront and then series of monthly payments. People can negotiate on different arrangements with their creditors with a proper co-ordination of experienced insolvency practitioner. It is nothing but a loan repayment scheme in actual sense that is how much you pay back is calculated by your income verses your expenditure. When it is agreed then the same scheme becomes the part of legally binding contract.

With the help of IVA you can also stop your Creditors forcing you into bankruptcy. But it is not a cake walk. You have to remember some important things before you do this. The most important being that is 75% of your creditors have to agree with IVA. Secondly, if you miss a repayment by any chance the arrangement then becomes null and void. Lastly, you should have enough income and assets for your creditors so that you can very easily cover the repayments.

IVA is mostly needed when you think you are facing bankruptcy. With the help of IVA you get more control over your assets. But with some good things comes bad things too. There are some minor disadvantages of IVA too. As we can see the current economic conditions which is stumbling down, the bankruptcies are expected to increase. As a result of this the fees of IVA will be drastically increasing.

If you think you are into bankruptcy, then make sure you take complete help of IVA but with that always make sure that you are quite capable of fulfilling your repayments or else you will be in soup.

Its time to know the FCRA

The Fair Credit Reporting Act along with the FDCPA (Fair debt collection practices act) is an American Federal Law which forms the base of consumer credit rights in USA. This act promotes the privacy of information on your file, the accuracy of your report and the fairness of reporting.

Know your rights under the FCRA:

1. Right to know the components of your file:

You have the right to do so giving proper verification of your identity. This will require your SSN. You are entitled to free reports in case of the following:

• Victim of identity theft and you place a fraud alert in your file.
• Legal action against you due to some information on your file.
• You are on public welfare
• As a result of fraud your file consists of inaccurate information.
• Unemployed but contemplating employment within 60 days.
• Entitled to one free annual credit report from each of the three bureaus.

2. Right to know your credit score:

You can ask for your score from the Credit reporting agencies or from ones who calculate your credit score. This comes for a price. However you get to know your score for free if your mortgage lender makes a pull on your report and score.

3. Right to dispute:

If you have found incorrect information on your report you can write to the bureaus and dispute it. They have to investigate into the matter if you provide relevant details.

4. Right to know who used your file against you:

Whoever is using your file to deny your credit or to take legal action against you, has to inform you and provide you with details of Name, address and the agency that is being used for the purpose.

5. CRA deleting invalid information:

Incorrect or invalid information have to be deleted after investigation and within 30 days.

6. Not updating of outdated negative account:

Seven years old negatives and 10 years old bankruptcies may not be reported to the credit bureau.

7. Limited access to your file:

In case you want to provide your information only to few. The FCRA defines who can have valid access to your file namely the creditor, employer, insurer, and businesses dealing with you or landlords.

8. Right to give consent before employer pulls file:

Unless there is a written permission your CRA cannot provide your information to your employer or a potential employer.

9. Limiting the pre-screened offers that you receive:

The pre-screened offers must leave their toll-free for you to call and opt out of their contact. You can use this number as well for the purpose 1-888-567-8688

10. Asking for damage control from violators:

Any violation of FCRA from any agency, you can sue them in the state or the federal court.

Have a Credit Counseling done

What is Credit Counseling?

For consumers having trouble paying their debts or simply making ends meet, a credit counseling service can provide information, guidance, and solutions. Credit counseling is often equated with debt consolidation, though they are not necessarily the same thing. There are hundreds of organizations that provide credit counseling. Most of them are reputable services committed to helping consumers resolve their money troubles. However, some charge excessive fees, give questionable advice, and fail to perform the services they promise.

How it is done?

There are basically three ways that the credit counseling term is used. First, it can be the same thing as debt consolidation. Many companies use “credit counseling” as a nicer way to refer to debt. A second way that credit counseling can be a “good” term is to actually mean counseling. Many credit reduction companies and private financial institutions offer credit counseling as a type of financial planning. Counseling can help figure out how much debt is owed and how to control debt in the future. In this sense, credit counseling should be apart of every debt reduction strategy. Finally, credit counseling can be a negative thing. The credit counseling industry is so profitable that dozens of new companies spring up each month. Many of them are operated by hucksters out to make a buck at your expense. Newsweek recently ran a story about the numerous complaints the FTC has received from consumers taken for a ride by credit counseling services.

How to Choose a Credit Counseling Agency?

To make sure you get quality services from a credit counseling agency, choose wisely. Start by getting referrals from friends and family. Also, check the listings at the National Foundation for Credit Counseling and the Association of Independent Consumer Credit Counseling Agencies (AICCCA). From www.tips.net you can get some good information on the credit counseling agencies. Check this out:



Credit counseling agency services include:

• money management education
• budget counseling
• debt counseling
• housing counseling (HUD-certified agencies), and
• referrals.