Now days, people use credit cards as another source of income instead of as a loan that needs to be repaid in full. This is the reason why people are incessantly falling into credit card debt. Almost thousands of individuals in the U.S. have hundreds of worth credit card debt. If you are among these staggering numbers of debt stricken individuals and looking for a debt relief option, credit card consolidation would be an ideal one for you. But now days, with the increasing options of debt relief program, a large number of people are falling victim to debt relief scams. As a result, the Federal Trade Commission issued a new consumer credit card debt relief rule on October 2010 with the aim of protecting innocent individuals from debt relief scams.

Credit card debt relief options:

Credit card debt relief options are primarily consist of credit counseling services, debt management plans and debt settlement programs. When you hire the services of a credit counseling agency, credit counselors assist you in reviewing your fiscal situation in order to determine a suitable financial solution for you. They also help you in managing your finances and planning a well-organized budget so that you can not only waive off your financial obligations but also can achieve a strong financial future. However, once your financial situation has been reviewed, credit counselors may ask you to enroll on a debt management plan. With a debt management plan, you need to pay a fixed monthly payment to the counseling company, who then pays to the creditors to pay down the debt.

Debt settlement programs:

When you enroll on a debt settlement program, debt settlement companies negotiate with creditors in order to reduce the pay-off amount so that it becomes easier for you to pay off the debt. But now days, there are many debt settlement companies that claim to reduce your pay off amount by upto 30 to 70 percent, but ultimately do nothing. These companies collect the up-front fees from the consumers even before making an attempt to negotiate with lenders. For all these reasons the Federal Trade Commission introduced new consumer credit card debt relief laws.

Fees:

The FTC’s new consumer credit card debt relief rules prohibit debt settlement companies from collecting fees prior to a successful negotiation and outstanding debt reduction. The settlement companies have to present some form of written agreement, debt reduction and payment plan before you before they start charging fees. The FTC also prohibits the companies from collecting fees until you make at least one payment to the creditor in accordance with the agreement negotiated by the debt settlement company. In addition, as per the FTC’s new rules, the money you pay to the settlement company has to be deposited into an insured bank account that you can control instead of the debt settlement company.

Disclosure:

The FTC declares that the debt relief companies should disclose all the information about their services to consumers. They should inform the price and terms to the consumers, and also the duration that settlement process should take. The companies should also inform the consequences of the settlement process to the consumers, including bad credit score, lawsuits and taxes.

In conclusion, afore mentioned are the new consumer credit card debt relief laws issued by the FTC in order to protect the consumers from being prey to the settlement or debt relief companies.