Laws to Eliminate Debt Cures
There is no quick cure for debt and individuals who expect one usually find themselves further in debt. Should the government protect consumers from dangerous consolidation loans? Perhaps--and there are laws aimed at consumer protection--but it's ultimately the consumer's job to avoid bad consolidation loans. Laws to eliminate debt cures are difficult to police. It's much easier to educate the public.
Other People Are Reading
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Serious Debt
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Most everyone has debt, but how much is too much? Calls from collection agencies and disconnected utilities are some signs of extreme debt stress. In 2009, CNN reported the average U.S. household has $10,700 in credit card debt. Should those with less debt feel good? Not necessarily. If debt is negatively affecting your daily life, marriage and health, outside intervention is a good idea.
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Legitimate Solutions
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Relieving debt and rebuilding credit correctly takes time. Nonprofit organizations, such as the National Foundation for Credit Counseling, guides consumers to certified counselors who will help them consolidate debt with affordable payments. Look for ".org" rather than ".com" websites and start by reading about the organization. Is it a 501(c)3 nonprofit firm? If so, they're in it to help the consumer, not make money.
Solutions to Avoid
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Searching for the phrase "debt cures" on the Internet yields more than 600,000 hits. Is it any wonder people get sucked into bad debt consolidation loans? Experts say to avoid options such as debt consolidation on credit cards and thoroughly check out any consolidation loan. A good consolidator will ensure that 100 percent of the consumer's monthly payment goes toward paying down their debt with any reasonable, associated fees collected up front and fully explained. In short, consumers should avoid any option requiring them to assume considerable additional debt to relieve their current debt.
Those Who Prey
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People in serious debt can be desperate and, therefore, easy prey. Companies profit from this desperation by keeping individuals in debt. They collect monthly but the original debt is barely touched. Payday loans are another poor choice. These loans are quick and easy to get, but default on a payday loan and high interest rates can result in uncontrollable debt. Even professional credit counselors have difficulty negotiating repayment of a payday loan.
Laws to Protect Consumers
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The Federal Trade Commission governs creditors and their practices. Individuals might receive the required literature explaining the loan and they might even sign a form saying they understand it. But unless they're in the financial industry, they probably don't comprehend half of what they read. In short, there are laws, at the federal level, protecting consumers against fraudulent debt cures, but the consumer must take the initiative. Debt relief organizations must detail their services and the total costs. Consumers are expected to read and understand the material and report noncompliance by lenders.
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References
Resources
- Photo Credit "Facing Foreclosure with A Sea of Mail" is Copyrighted by Flickr user: Casey Serin (Casey Serin) under the Creative Commons Attribution license.
